Last year the average American spent about $630 on gifts and another $200 on holiday related spending. But with money a little tight for many folks, spending less this holiday season is something that is top of mind. Jay Seaton with Consumer Credit Counseling said it's doable.

"Have a little bit of a plan and I don't think that that takes the fun or the spirit or the heart out of the holidays," said Seaton. You need to know going in what your situation is, so you can spend realistically.

Surveys show a quarter of all Americans take 12 months to pay off their holiday purchases when they're put on credit. So, some of the nation's largest retailers like Sears and Kmart offer layaway, and holiday club accounts. A club account lets you save without tapping your credit cards. You can open one with as little as $5 and for every dollar you set aside, the stores will give you a 3 percent match on your total as of course, you have to spend the money at that store.

Many banks and credit unions offer holiday accounts too. Money is automatically pulled from your checking or savings account on a periodic basis and put into your holiday account.

As for going "cash only", Seaton said don't set an unreasonable goal. "In some ways I want to say yes to cash only, but I think for some folks it may not be practical. What I suggest is a mix of the two."

First-- make a detailed list of everyone you buy for, and everything holiday related like travel expenses, decorations, gift wrap, cards even food.

Check out the deals that are out there now. Target has already cut prices on top toys like Barbie and GI Joe by 50 percent. Walmart is selling Transformers and other toys for $10 or less. And Kmart is offering some of its popular toys for $11.

If you are cutting back this holiday season, Seaton said be honest with your children and remember the spirit of the season. "Talk with them about what the holidays really mean. It's togetherness, it's family."