Identify Your Habits to Shop Intelligently

This time of year, I try to provide advice to keep people from plunging into debt as the season of shopping madness begins.

But maybe I won't need to fuss too much this holiday. There's enough troubling economic news to help some consumers avoid overspending, right?

Let's see, foreclosures are up. Gas prices are rising. Bankruptcies, too. In the first three quarters of this year, bankruptcy filings by individuals or households with consumer debt increased 40 percent compared with the same period a year ago, according to the American Bankruptcy Institute.

Auto loan delinquencies were up slightly in the past two months, according to an analyst for Lehman Brothers.

Oh yeah, let's not forget the stock market.

Share prices have taken a dive many times in the past few weeks, and investors are skittish. Worried about their investment portfolios, consumers are less likely to spend frivolously.

Home values are down, preventing many homeowners from refinancing as they did in past years. This means they can't pull out cash to rescue themselves from spending sprees. Falling home prices have put one-third of the United States in or near a recession, analysts for Goldman Sachs wrote in a recent report.

Taken together, all this bad economic news is likely to cause consumers to pull back on holiday spending. Thirty-five percent of consumers said they plan to spend less than last year, according to the eighth annual holiday spending survey commissioned by the Consumer Federation of America and the Credit Union National Association.

At least that's what they say.

The problem is that even though evidence points to a need to stockpile some savings to weather a coming economic crisis, consumers don't always follow through with their less-is-better plans.

"Our experience with this survey is consumers tend to say they will spend less than they actually do," said Bill Hampel, chief economist for the credit union association. "Many households will feel financially 'hung over' in a couple of months unless they do something about it now."

And what might that something be?