Holiday Gift Giving: Avoiding the Hype -- and the Debt

Tracey Gold Bennett | 11/14/2011, 1:47 p.m.

A 2009 Gallup poll showed the average American spent just under $800 on holiday gifts. While that figure dipped in 2010, some people can't resist the lure of holiday shopping and excess.

So how much will you spend this holiday? How much will you regret the big bills in January?

Wesley Watkis, financial wunderkind, founder and managing partner of The W and W Financial Group in Chevy Chase, Md., offers a variety of investment advisory and financial planning advice.

During a recent interview with The Washington Informer, Watkis talked about how to avoid holiday debt:

WI: What are your recommendations for people who are enticed by sales on Black Friday and during the holidays? Why isn't it a good thing to charge up gifts on your credit cards?

WW: My suggestion is don't get caught up in Black Friday. Keep in mind this is the beginning of the money- making season for retail stores -- that they make the bulk of their profits from Thanksgiving until Christmas. I would also say to take advantage of the deals, but don't buy what you can't afford - hence, if you don't have the cash to afford it, don't use the plastic.

The reason why you shouldn't use credit cards to buy gifts is because you will be tempted to over extend yourself. If you have the discipline to pay the bill off in full when it comes in, then use the card but since most people don't, I would stay away from it.

WI: What are some nontraditional gifts that don't cost a lot of money that people could consider giving this year ? For example, donations to charities.

WW: Nontraditional gifts...(I love this!!!) I strongly recommend giving things that appreciate in value (not collectables) such as stocks (I call this the gift that keeps giving dividends). I would encourage people to buy stocks for people/children that they can relate like Disney for kids, Starbucks for adults. If you want to do a more philanthropic gift you can donate investments (stocks, bonds, mutual funds) to a charity or church, or you might donate a paid-up life insurance policy to a charity or church.

WI: How would you characterize the economy, and why are we here -- how can we get out of this? In other words, the United States used to be the leader in the world in terms of the value of the dollar bill -- now, because of the down economy -- our collective credit is on shaky ground - explain.

WW: We are in a place where the new normal is being redefined every day. Meaning the volatility that we see in the stock market is here to stay for a while . The flip side is that this economy is very resilient. History has shown that after great downturns in the economy it is followed by great upturns. I think the difference this time is that it was underestimated just how bad the economy is. We have a good 10 years (in my opinion) of this purging process. I think because we live in the "instanct age" people expect things to get better quickly.....I don't believe that's going to happen.