McGuire: Let the ghost of Christmas past guide your holiday budget

I haven't even donned my Bride of Frankenstein wig for Halloween and my mind is fixated on December. This is not because I love Black Friday, or can't wait to trim the tree. It's because that familiar preholiday angst is creeping in. I'll start with a loose holiday budget. I'll blow said budget. Come January, I'll receive a credit-card bill that's bigger than anticipated, wiping out savings I'd intended for something else. Happy New Year!

That's the way it always is. And I'm lucky to have a reserve so this unintended tradition doesn't put me in debt. Acknowledging a problem is the first step to solving it, so this year I'm going to break this unfortunate holiday habit.

The forecast for holiday sales is mixed this year. PricewaterhouseCoopers expects household spending to drop about $50 to $684 as a result of slow wage growth and rising costs. However, the National Retail Federation's annual survey expects the average household to spend $804 — up 5 percent from 2013.

Either way, sales and discounts will be just as important to shoppers this year, said NRF President and CEO Matthew Shay in the federation's annual holiday news release. People also claim they'll find the additional funds by spending less on themselves — a level of resolve that's easy to conjure when surveyed in October, but harder to count on at the shopping mall in December. Fooling ourselves about money behaviors is our first folly as irrational beings.

This leads to my first strategy this season: Make a realistic plan. In the past, I've jotted down spending limits, patting myself on the back for embracing thrift. Then I get carried away and overcorrect.

This is where history is helpful. Looking at how much I spent last year and on whom is a bit tricky to parse out, at least for my non-online purchases. But it gives me a pretty good starting point.

With just five pay periods for me until year-end, I either need to set aside a sizable chunk of my paychecks to go toward gifts, or I need some new strategies.

This is why making a spending plan for annual events should take place as close to the end of the prior year's event as you can stomach. Two and a half months before the holidays is really too late to plan for gift spending, especially when three out of my five family members also have December birthdays.

Money is a limited resource for most of us, and I have to work with what I've got. I plan to use the following moves to keep my holiday spending in check.

Rewards perks. Loyalty programs are another form of currency. Those airline miles that are about to expire? I'll use them to "purchase" magazine and newspaper subscriptions.

In the past, I've used the rewards points amassed on my credit cards to buy gift cards, stretching my points as far as they can go by looking for the gift cards that cost the fewest points for the highest value. Nearly two-thirds of respondents in the NRF survey said they prefer to receive gift cards over any other present. Some people consider gift cards to be thoughtless, but so long as you put time into selecting the right gift card, I'm OK with the crowd-pleasing present.

Now that Amazon has partnerships with most major credit card issuers to use points at checkout, I can literally use my rewards points as currency — a point equals a penny. The only catch is that you must use the same credit card to cover the remaining total.

Checking to see if your card has certain bonuses between now and year-end is also a smart move. For example, Chase Freedom cards earn an extra 5 percent cash back at Amazon and many major department stores through December 31.

Many credit cards also have online shopping portals where cardholders can earn additional rewards for shopping at dozens of retailers. For example, you can earn 5 percent cash back at Best Buy if you shop through the Shop Discover portal (the site is being renamed "Discover Deals").

There are plenty of people who should steer clear of credit cards, however. If you carry a balance on your cards, or go overboard when you use them, then forget everything you just read. Rewards credit cards tend to carry higher interest rates and some come with hefty annual fees. It never makes sense to prioritize rewards over common sense.

I'm a big proponent of shopping local, so it's important for me to balance the strategies I shared above with the need to support my area's small merchants. Last year, I bought several gift cards for the coffee shop near my son's preschool. The year before, I purchased gift certificates to an independent bookshop.

American Express will make it worth your while to shop small on Nov. 29 — also known as Small Business Saturday — by issuing a $10 statement credit when you use your American Express card at a participating small business on that date. To participate, visit shopsmall.com in November and register your card.

If you can't wait until Saturday to shop, check out Plaid Friday, a local business alternative to Black Friday that's trying to spread the word (search Plaid Friday Twin Cities on Facebook for more details).

Finally, there are two additional strategies I'm planning to use that should lessen the post-holiday bills. Any of my friends will tell you I'm possibly the world's least crafty person; I've joked that I'm not even welcome on Pinterest. This year, I'm going to find some kid-friendly project and make gifts for teachers and bus drivers. It will get my children involved in saying thanks to important people in our lives — something that often gets overshadowed in the holiday hubbub — and potentially reduce the cost of such gifts but not the meaning.

I'm also going to involve my children in selecting charities to support in the names of our loved ones. No more worrying about what to buy the grandparents who have everything. This year, we'll adopt an animal, buy meals for a struggling family or support a microbusiness in a faraway place. It's more meaningful, and it's more in line with our society's growing preference for less stuff.

What makes this plan even sweeter? The person making the donation gets the tax deduction on an itemized return, not the person named on the gift. So this plan will bring me closer to my goal of donating more to charity while setting me on a path for saner holiday spending.

Kara McGuire is a consumer strategist for CEB and author of "The Teen Money Manual." Send column ideas to kara@karamcguire.com.