It’s the spending - er, holiday - season again. Retail statistics tell us that the holiday season brings in up to 40 percent of annual sales and 75 percent of yearly profits for most retailers. Fed Chairman Greenspan (and others) tell us that consumer spending in recent years has been bolstered by heavy use of home equity borrowing.

In the most recent year, an estimated $600 billion of consumer spending was the direct result of home equity extraction. The trend is expected to continue this year somewhat slowed, perhaps, by higher interest rates.

Not surprisingly, ad campaigns for HELOC lenders are also at their peak during the holidays - right alongside the retailers’ ads. A recent Bankrate article, highlights the accomodating role that lenders can play:

Home-equity debt traditionally has been spent on investments that bring some kind of return — renovating houses, paying for college, starting small businesses. More recently, as consumers have become more clever about using debt, equity loans are seen as a cheaper, smarter way to consolidate debt and pay for such items as cars and furniture.

But gifts and airline tickets to visit family? Believe it or not, bankers and consumer advocates agree that there are times when it’s appropriate to pay for something so fleeting by charging it against the roof over your head. It’s not exactly wise to go into debt to pay for presents, but if you’re going to do it, you might as well do so as inexpensively as possible.

Seems akin to saying “smoking is terrible for you, but if you’re going to smoke, buy inexpensive generic cigarettes.”

Of course it’s not lenders’ job to supervise the borrowing and spending habits of their customers. Adults are responsible for their finances.

Used wisely HELOC’s can be excellent tools to facilitate holiday cashflow needs - e.g. to meet a credit card obligation coming due before a paycheck arrives or to grab a great deal when other cash resources aren’t readily available. But to be effective, a HELOC used in this fashion must be repaid in the short-term - meaning ASAP.

Going into long-term HELOC debt (or any type of debt for that matter) to pay for normal holiday shopping simply is not a wise strategy. Ideally, you should set a holiday budget you can afford to pay for - and abide by it.

TIP: After you come home from a shopping trip, add up all the receipts and look carefully at the things you’ve bought - are they really worth it?. It’s not uncommon to “go overboard” while shopping. But that doesn’t mean it’s too late. If you find yourself wondering how you’ll pay for everything, don’t be shy about reevaluating your purchases and returning items for a refund.