Christmas trees, reindeer and Santa Claus figurines and other reminders have made their appearance at local shopping malls. With the approach of the holiday season, we're tempted to overextend our generosity and dive ourselves into debt. On credit we buy lots of gifts, treat ourselves to fancy dinners and escape to warmer climates. The joy and cheer of the holiday season is soon replaced with the agony of receiving thick credit card statements. This practice may force you to borrow again in January or February to make a last minute RSP contribution, knowing that the income tax refund can be used to help relieve some of the credit pressures.

How can you prevent yourself from falling into a debt trap? Answering these questions might save you money and prevent some grief:

Is this item something I NEED or is it something I WANT? Planning your purchases ahead will minimize impulse buying. Impulse is rarely a well-thought strategy for buying goods or services and often leads to regret. A real sense of empowerment is achieved with a well-planned purchase of something that will give you long-term satisfaction.

Are there cheaper credit options available? You are probably inundated with offers for credit cards with a cheap initial interest rate. But these rates soon increase. The path of least resistance is to sign up and add another piece of plastic to your collection. However, there are other options. Ask your current credit card provider if there are cheaper options. As well you might wish to open a line of credit to pay off any lingering balances on your credit card. The interest rate charged on a line of credit is usually significantly lower than credit cards. This is a good strategy as long as you start paying down the balance. Otherwise, you may just add more debt to your over extended situation.

Is this credit deal too good to be true? With the end of the year come the don't pay until 2004 events. These programs are designed to appeal to impulse buyers who want luxury now and debt later. If you can't afford that big screen TV now, chances are you won't be able to afford it in 2004 either. Financing charges of 20% or more are sometimes charged retroactively to the date of the original purchase. This can be a very expensive and dangerous proposition.

During the upcoming holiday season, be generous to your friends and family, but be good to yourself as well. Follow the right path toward financial security. If you must borrow, explore all your credit options. By saving money on your credit, you'll have extra cash for yourself. Give yourself a gift and budget a few dollars toward your retirement.

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of Fundex Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.