Time To Budget For Holiday Gifts

(CBS)  Most people haven't even thought about Halloween costumes, much less holiday gifts.

But financial guru Dave Ramsey says we all need to begin planning ahead for the season — a time of year that drives many people into debt.

He visits The Early Show to offer planning advice. A little budgeting now can save you big financial pain later, according to Ramsey.

Here are his answers to some of the most common questions that people have on this topic.

Q: What's The Best Way To Plan Ahead For Holiday Spending?

A: First of all, know that if you haven't done any planning yet, you can still escape from this year's holiday season debt free. You need to sit down and make a list of

• Who you're buying a gift for this year and
  
• How much you plan to spend on each person.

You now have a Christmas budget and you need to either begin putting this money aside. Of course the hard part is sticking to the budget.

Q: How Do I Avoid Overspending During The Holidays?

A: Spend cash. As you save for the holidays you should be setting aside cash and putting it in an envelope. When you head to the mall, don't take your credit card. Instead, take this envelope of cash and your list. If you overspend on several people on your list, by the time you get to the end of the list you'll clearly see that you don't have the money you need.

It's too easy to spend "just a little more" than budgeted on every person on your list when paying with a credit card. With cash, there's a sense of the finite. When the money's gone, it's gone.

The idea of carrying around a fat envelope of cash may sound weird, but it's time for folks to try something different, a different approach to the holidays.

Q: How To Stop Wanting To Spend More Than What You Have?

A: Have an honest conversation about your decision with others in your life, and lowering expectations before the shopping season even begins.

Tell your kids, "We're still going to have a wonderful holiday season, but we're going to be very selective about what we do and what we buy." Tell your extended family at Thanksgiving that you simply can't afford to buy an extravagant gift for each person around the table, and suggest drawing names for a gift exchange instead. However you approach the situation, and whatever solutions you choose, the key is honesty.