Spend Smart

Six steps to keeping yourself financially afloat during the holidays.

Afraid you’ll see a little more red than green this holiday season? Not to fear. From gift giving to charitable donations, here are six practical holiday-spending pointers that will keep you rolling in the (cookie) dough.

Start saving now: Sometimes the best advice is the most obvious. Nothing can prepare you more for the holidays than simply setting aside a little money throughout the year. As president of the Financial Strategies Group in Cleveland, Bob Karras recommends saving money in a liquid account, such as a savings account, with low risk and good interest rates. “Risk-free is always the way to go when looking to save money,” he says.

Cash, not credit: The best piece of advice Karras says he can give is to spend cash instead of using your credit card as a default. Use the debit card instead of the credit card. Some people will tend to pay up to 30 percent more for a charged purchase by thinking the ever-popular phrase I’ll worry about it later. Later will come a lot sooner than you think.

Know your plastic: If a credit card is your only option, you’re like most Americans. But before you mumble, “charge it,” be sure you’re not spending money you don’t have. Aaron Reitz, a client adviser with Private Client Groups at National City Bank, recommends paying off all old credit card debt before the holidays. This way you can start with a clean slate and have a better chance of paying off new debt right after the holidays instead of six months later. Before you charge, call your credit card company and look into getting a fixed rate. Also try to consolidate to one major credit card instead of using store credit, where the interest rates are usually much higher.

Shop early, enjoy later: Quick, it’s still October, there’s still plenty of time for pre-holiday shopping. Start making your list of the people for whom you plan to buy. Be sure to stay within your limit, and when you have bought for everyone, you’re done. No exceptions. It’s the impulse buys that will kill your bank account, so avoid those when you can. And don’t forget to always save your receipts.

Shop online: With gas prices soaring, it may be worth doing holiday shopping online instead of running from store to store and having to deal with the sometimes less-than-friendly sales associates and always less-than-friendly winter weather. As Karras says, “There is a cost to aggravation,” so avoid it if you can. Some Web sites offer special shipping deals during the holidays. Weigh the cost, but most likely, shipping may be cheaper than filling up your tank on several trips to the mall (not to mention the lack of snow in your living room). Enjoy holiday shopping from the comfort of your own home and maybe even avoid those terrible impulse buys.

Donate more than just money: It may be the season of giving, but that doesn’t mean you have to give all that you have. Don’t be a Scrooge either. If money is extra tight, donate your time and volunteer. It’s guaranteed to give you the same warm, fuzzy feeling on the inside. If both time and money are tight, Reitz has several solutions. Consider donating in someone’s name as a holiday gift. This will kill two birds with the same dollar. Reitz also recommends donating appreciated securities to charities instead of cash. This will keep you from having to pay taxes on the gain — another unneeded cost to worry about after the holidays.

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