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There is always a certain tension between the interests of businesses and those of consumers. Businesses need to post record sales. Consumers need to stay within their budget.

During the holiday season, those competing interests often collide and when consumers lose, they can end up paying for it well into the following year.

This year the shopping has started early, with most major retailers rolling out pre-Black Friday sales in October and November. If consumers have already been shopping, they may have lost track of what has been spent so far.

If they get caught up in Black Friday, Small Business Saturday and Cyber Monday madness, they can easily go deep into debt without realizing it.

“If there’s one time of the year when people shop with their heart, not their head, it’s the holiday season,” said Gail Cunningham, spokesperson for the National Foundation for Credit Counseling (NFCC). “Emotional spending during the holidays is often the tipping point that pushes people over the edge financially, as common sense can take a backseat during this time of the year.”  

Starting with a big balance

The problem is made worse because so many consumers already have large credit card balances that they may be struggling to pay. Maybe they've made some progress over the last few months in paying down the balance. Adding to it in a burst of holiday spending can have a demoralizing effect as well as a financial one.

The financial effect is bad enough. Piling new debt onto an existing debt load that can't be paid off when the bill arrives means paying more money each month in interest. That means you're starting the new year with an increase in monthly expense.

Some of the drawbacks

Remember that an increased level of debt reduces the amount of credit available to you in the future and might even cause lenders to reject applications for new lines of credit or loans. If you are unable to tap into credit in the future, your financial position becomes weaker.

Increasing your debt level – especially credit card debt – can lower your credit score. Unmanageable debt can lead to late payment of bills, skipping payments, and utilizing too high a percentage of open credit, all of which could lower the all-important credit score.

And if you apply for new lines of credit simply to save money on today’s purchase, it will not only increase the temptation to spend, but will show as an inquiry on the credit report, potentially lowering your score.

Tips for staying on a budget

Here are some tips to keep from overspending this holiday season:

First, determine how much you've already spent. Subtract that from what you plan to spend and that's how much money you can spend on gifts and festivities for the rest of the season.

Second, try to do as much of your spending as possible with cash. Cash is a great accounting tool because when it's gone, you're done. In this era of cyber crime, it's also safer.

Third, look for the best deals. There are a number of apps and technology tools that can help, including ShopItToMe, which analyzes your shopping list and tells you where to buy everything on it for the best price.

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