Cut back for the holidays

Consumers have done more than their fair share to keep the economy afloat for years. It’s time to let others lift up the economy.

Or, as ethicist Bruce Weinstein says: It’s OK to be a tightwad.

“It’s not only OK in some circumstances; it would be wrong if we weren’t,” Weinstein said. “Because you shouldn’t spend what you don’t have.”

This is especially true during the holidays, a time when so many people go overboard and figure they’ll deal with the consequences later.

You have an ethical obligation to express gratitude to loved ones or those who have helped you, and many people think of giving thanks this time of year, Weinstein said.

But you don’t have to buy gifts for all of those people to the point that you’re putting your family’s finances in jeopardy, he said.

And many do just that.

A recent Consumer Reports survey, for example, found that about 12 million Americans are still digging out from under last year’s holiday debt.

“There is a lot of pressure to create the perfect holiday,” said Latoya Peterson, a communications specialist with the Center for a New American Dream in Takoma Park, Md.

She said the economic crisis might cause some consumers to spend as much as last year, not less.

“They feel they need this kind of feeling of normalcy,” Peterson said. And that often means emulating TV commercials with people opening expensive presents, she said.

But with shrinking retirement accounts, record credit card debt, stagnant wages and rising unemployment, this is no time to splurge with money you don’t have.

Besides, friends and family would feel guilty if they knew you were going into debt just to buy them lavish gifts, Weinstein said.

And gifts, while nice, aren’t as important as you might think. Can you name every present you received last year?

“People don’t remember. It doesn’t mean we’re ungrateful,” said Mary Hunt, founder of the Debt-Proof Living website and author of “Debt-Proof the Holidays.” It’s just that gifts usually don’t create lasting memories the way spending time with loved ones does, she said.

Of course, there’s a wrong and right way to be a tightwad.

The wrong way: “It’s cheap, but not in the best sense. It’s Ebenezer Scrooge before his epiphany,” said Tod Marks, who writes Consumer Reports’ Tightwad Tod blog.

Also canceling all holiday festivities because suddenly money is short. “Your family will feel the loss twice,” Peterson said.

“What is OK is to recognize your circumstances,” said Peter Post, director of the Emily Post Institute. “Look at what you can reasonably budget without getting yourself into debt. And then do the very best you can with that.”

You can explain to friends and adult relatives that you’re cutting back this year because of budget constraints. Most will understand. Many will probably be happy to scale back the holidays with you.

Choose your words carefully with small children. Don’t tie the reason for a more modest holiday celebration this year to a lack of money, Hunt said.

“Don’t let them be fearful of the future,” she said. Give them confidence that you have things under control, even if a parent has lost a job, she said.

Think of ways other than spending a lot of money to be generous or show your appreciation.

A heartfelt note of what a friend or relative means to you will be more memorable and valuable to the recipient than another gizmo or sweater that will soon be forgotten, Weinstein said.

“Give what you do best,” Hunt suggested. “Give four hours of window washing if you’re a fabulous window washer.” Or give your time, especially with children. “Children like time alone with an adult,” she said.

Regifting has grown popular as a way to save money or to clear closets of unwanted gifts. If you choose to do this, use care.

Give items that are in excellent condition. And make sure you never recycle a gift among the same group of friends or family that it came from. You don’t want to offend a friend by returning a gift.

Some people welcome recycled gifts.

“Some people have regifting parties if they are frugally inclined,” Peterson said.

Charities rely heavily on your generosity this time of year. If you can’t contribute cash, there are other ways to donate.

Ask someone who is planning to give you a gift to make a donation to your favorite charity instead, for example. Or donate your time, and not just around the holidays when volunteers are more plentiful.