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Prepare your finances for the holiday season

Date posted:  10/10/16 09:00:00 AM Hand on keyboard entering credit card number

While you might not be thinking about the holidays, the most wonderful time of year will be here before you know it. Don't feel like you need to rack up a ton of credit card debt this season. Instead, plan ahead to gain control of your finances.

Pay off credit card debt
The last thing you want to do is enter the season feeling like you are drowning in debt. To ensure you feel more financially capable of handling the holidays, start paying off as much of your credit card debt as possible.

The best way to tackle your bills is to develop a plan and stick to it. U.S. World & World Report noted there are three common strategies many individuals use when paying off debt. However, when you decide to take on this challenge, you have several techniques available to you. Whether you focus on the card with the smallest balance, want to spread your resources across multiple cards, or pay off the card with the highest interest rate, considering all of the strategies will help you create a plan to help you eliminate debt.

"Generally, we recommend clients estimate the most expensive debt first since they will pay less interest," said Zev Fried, a financial adviser with JSF Financial Services, according to U.S. News & World Report. "However, the snowball method's value is psychological and behavioral. It feels good to see an account at zero. This often motivates them to stick with the program and become debt-free."

Think about what your unique habits are. Do you prefer to see progress quickly? Or are you more interested in ensuring you don't pay more in interest? Paying off credit card takes more than just money; it also requires commitment and determination.

Control spending habits
If overspending is the culprit behind your credit card debt, Bankrate suggested setting a budget to ensure you get your spending under control. Take some time to determine what your basic necessities and financial obligations are. In addition, you'll want to account for irregular expenses, including:

  • Car repairs
  • Healthcare-related costs
  • Vet bills
  • Travel
  • Gifts

After figuring out how much will be entering and leaving your bank account each month, you can have a better understanding of how much money you have to allocate to credit card debt, savings accounts and miscellaneous expenses. Budgeting like this will help you regain control of your financial situation.

Start saving
Building some savings now is another way you can ensure you stay on the right financial track throughout the holidays. When you have money tucked away for the future, you're less likely to charge upcoming expenses to your credit cards. However, you may find it difficult, or even think it is impossible to save money if you are trying to concentrate on paying off credit card debt. Fortunately, there are a few tricks to increasing your savings while living on a tight budget.

Bankrate suggested automatically stashing a specific amount of money in your savings account each paycheck. When you make it automatic, you won't have to think about it, making it easier to accumulate funds. Select an amount you know you can handle, no matter how small. As you continue working through your new budget, you can increase the amount you save each paycheck.

Even saving change can add up over time. Use a piggy bank or other container to keep loose coins. You may be surprised how much you wind up with when you bring them to the bank. This extra money can be helpful when it is time to tackle your holiday shopping.

Look for deals and plan ahead
Whether you know you'll need to buy presents or plan to travel this upcoming holiday season, planning ahead for these expenses will always help you save money in the long run. Be on the lookout now for any deals. Consider signing up for a travel site's mailing list or sprinkle present purchases throughout the season instead of focusing it all in a short time period.

Forbes also suggested cutting back spending preemptively before the arrival of the holidays. Instead of buying lunch, start meal-planning to ensure you save money throughout the week. Cut out soda or alcohol when you do go out for a meal at a restaurant to save even more. There are plenty of small ways to reduce overall spending.

In addition, before you trim the tree, you may want to trim your gift list. Instead of buying everyone you know a little something this holiday season, prioritize the people in your life. Another way to decrease the number of presents you buy is to suggest drawing names this year.

The holidays can get expensive, but by getting control of your finances and planning ahead, you can ensure the season, and your wallet, are jolly.