Your Guide to a Debt Free Holiday Season

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You probably don't want to start thinking about Christmas and the holiday shopping season this early, but it's in your financial interest to do so.

While it is possible to escape Christmas debt-free, it does require a bit of organization, preparation and willpower. By taking the time now to create your holiday shopping plan, you are much more likely to find that there isn't any extra debt to have to deal with even after all the celebrating is over. Here are a few steps to take to make that happen:

Budget and list: Your biggest enemy during the holidays is impulse purchases. With sales and specials in every retail window, it's easy to get sucked into purchasing items that you never planned to buy. To avoid this, you need to make a budget of how much you can afford to spend. Once finished, make a list of all the people who you need to buy gifts for and figure out how to make those fit within that budget. By assigning prices to all the gifts that you need to purchase, you'll know exactly what you can and can't afford.

Start yesterday: When it comes to getting all the gifts that are on your list, the more time you have, the better. If you have already found gifts for some of the people on your list, you're way ahead of the game. If not, start looking right now rather than later. The longer you wait, the less likely you are to find that special gift you want, and what you do end up finding will cost you a lot more. An added bonus of getting your shopping done early is a lot less stress.

Freeze the credit card: Credit cards can make buying easy, but they can also make racking up debt just as easy. Do what you need to make sure you don't use your credit card if you already have debt on it. Hide it in the back of your desk drawer, lock it in the safety deposit box at the bank or even dump it into a container of water and place it in your freezer. While these efforts might seem extreme now, it will be worth it when Jan. 1 comes around and there is no additional debt on your credit card to pay down. If you don't carry a balance on your credit card, make sure you don't use it unless you have the money to pay it off in full when the bill comes.

Don't get sucked in: This is the season when stores make most of their money, and they will pull out all the tricks to succeed. They will try to lure you with all kinds of special deals that will make you look twice. What you want to remember is that if you weren't planning to buy it, then it isn't a deal no matter how inexpensive it may seem. Sticking to your list and passing on all those deals no matter how good they may appear will do wonders for your wallet.

Buy gifts that give back: When you buy gifts this year, spend it on those that will end up saving money in the long run. For example, if your kids love their electronic games and go through batteries like water in the desert, then a rechargeable battery pack may be a perfect gift. It allows them to play their games as much as they want, and you aren't running to the store to buy new batteries every week.

Surprise your spouse with a new energy-efficient appliance or a set of tools for do-it-yourself jobs around the house. While you may have to spend some money upfront, the gift will end up saving you money in the long run.

Reduce where possible: See if there are opportunities to reduce the number of gifts you give. If you have always exchanged gifts with individuals of a group of friends, consider doing a Secret Santa where each person purchases for only one person in the group. Or suggest going out for lunch together as a group instead of giving gifts this year. In all likelihood, others are also looking for ways to reduce the amount they spend this holiday season, and a suggestion that will do so will be welcomed by all.

Spread out costs: One reason many people go into debt is because spending comes at the same time. Use your imagination on ways you can make purchases at a different time of the year. For example, if you know that someone would like to attend an event that happens during the summer, you can pay for them early in 2009 when money may not be as tight.

Create traditions: One of the best ways to save money is to change the focus of the holiday away from material goods to creating traditions. When it comes down to it, how many of the gifts do you remember you received over the years? On the other hand, you likely remember the traditional events that you did with your family each year much more vividly.

Zero-sum game: If your children are requesting a lot of gifts, make holiday gift-giving into a zero-sum game. For each new gift that each family member receives, they have to be willing to give up one (or more) of their old toys. If the toys are still in good condition, they can be given to charity, a new tradition. Not only will this help lower the number of gifts that need to be bought, it will also ensure you have fewer toys cluttering the room that need to be cleaned up.

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