Start now to prepare holiday budget

Your Money

September 18, 2005|By KNIGHT RIDDER/TRIBUNE

NEW YORK - More than three months of shopping days still separate us from Christmas, Hanukkah and other winter holidays. But Bankrate.com recommends that you get your finances ready now to avoid building up debt during the gift-giving season.

First, prepare a budget. Estimate your expenses last year for gifts, cards, decorations, food and other holiday necessities. If you saved those receipts, tally them up for accuracy. Based on those estimates and your current finances, figure out what you intend to spend this year.

Then, make lists of your gift recipients and items to buy.

The Federal Trade Commission recommends this as a way to keep track of your spending. It's easy to get swept up in the spirit of the holidays. But by planning in advance, you'll make it easier to spend wisely and focus on things you need.

Next, create a plan for holiday saving. You don't want to accumulate credit-card debt by charging all your holiday purchases. Start cutting back now where you can - pack lunches instead of eating out or skip a stop at the coffee shop. Designate the savings for the holidays in a separate bank account.

Finally, select one credit card for your holiday purchases. Consumer Reports recommends that you limit your holiday credit-card charges to items that require future action such as installation, alteration or repair; big-ticket purchases; items that will be delivered after you pay; or items that might break.

By buying them on the card, you have a paper trail if needed.

Do research on what credit card best fits your needs for the holidays. You may want a new card with a low interest rate or a generous rewards program. If you plan to use a card you have, prepare by lowering the balance.

To find a card that works for you, visit www.creditcards.com, www.credit-reviews.com or www. creditcarecenter. com.

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