The holidays are a wondrous time, full of joy, celebration and giving. It is also the season of spending. Planning is never more important than during the holidays, when overspending and debt are the quickest ways to rob you of your good cheer, and guarantee a New Year full of stress. Below, you will find some measures you can take to stop impulse buying, curb overspending and plan for a debt-free holiday.

Start Early

The benefits of saving early in the year are self-evident. The sooner you start planning and saving, the more money you will have when the holidays roll around. With the holidays right around the corner, you may be thinking that advice to start early has come a “day late and a dollar short”. I assure you there is no better time to review your spending habits, look over your budget and make plans for the New Year and coming holidays. It is a fresh opportunity to take note of where you did well and where you can improve.

The nearing of the holiday season doesn’t let you off the hook. No matter how close your deadline looms, it is always beneficial to start saving as soon as possible. For you, that is right now but first you need to make a plan.

Make a Plan 

Creating a practical plan through listing and budgeting is the cornerstone to creating an enjoyable holiday. It will allow you to relish the joy of giving gifts to those you love while removing the stress and burden. Start by making a budget.

For those of you that have created a budget before, you have probably started this task by creating a list of people to whom you want to give gifts. This year, try something new by starting with the dollar amount you can spend first.

Nobody knows your budget and living expenses better than you do. Figure an amount that you can spend that will not involve using credit cards and lines of credit. If you are doing this at the beginning of the year, you can even go a step further and break down the amount you need to save monthly in order to reach your goal.

Once you have a dollar amount that you can sensibly spend, write down the list of people for whom you will buy gifts. Write a list in order of priority, from immediate family to extended family and friends.

Double-check your list. Often we have a desire to buy for everybody when realistically we are not financially able to do so. Perhaps a beautiful postcard with a personal message would do for some. Consider your list and consolidate it if necessary.

Once you have your spending allotment and your list, divide up the dollar amount amongst the people you want to buy for, again in order of priority. Obviously, if you start saving earlier in the year, your amount to spend will be more than if you are starting now. Either way, doing this will help to keep you on track to an enjoyable holiday, free from debt. Now that you have your plan let’s discuss how to find money to save.

Find the Leaks

Money is tight for many, and when you’re pinching pennies it’s easy to see why people may feel intimidated by the idea of saving for a holiday. In reality, saving isn’t all that hard or daunting a task. In fact, when saving, it’s the little things that add up! Cutting back in little ways each day can mean big money when the holidays roll around. Let’s look at some easy ways we can find the money leaks.

Stop eating out: Eating at home is, usually, the easiest area to improve and makes the biggest financial impact. According to a Rasmussen Reports national telephone survey, Fifty-eight percent (58%) of American Adults now say they are dining out at least once a week. Some studies show that 1 in 4 Americans eat some type of fast food every day. That is a whole lot of potential savings! If you eat out once a week, with an average of $10 a meal, you could save $520 a year by putting that into your holiday fund instead. That’s a great start to your holiday savings!

Make your coffee at home: According to the National Coffee Drinking Trends market research study, 83% of Americans are coffee drinkers. Nearly one-third (31%) of those American coffee consumers drink gourmet coffee (think Star Bucks). Depending on what you order, a good cup o’Joe can set you back anywhere from $3 to $5. Even if you order the less expensive drink on the menu twice a week, your spending $312 a year.

Snack Less: If you were to take that daily $1 that you spend on a soft drink or vending machine snack and put it into your holiday savings fund, you would have $365 after a year of savings.

Hold a garage sale: Do you have clothes you no longer wear? Books you no longer read? Are appliances gathering dust on the shelves? Turn those unused items into holiday cash! This one will provide you with the extra bonus of de-cluttering your home. If you are starting in the colder months when garage sales aren’t in season, look into selling your gently used items online through free online classified ads, craigslist or eBay.

If online isn’t your thing, and you prefer brick and mortar stores, consider antique boutiques, thrift shops, consignment stores or pawn shops.

Recycle scrap metal: You know that old water heater you have taking up space in the garage? It could be the key to throwing that holiday party you have always dreamed about—it’s true! Recycling scrap metal is easy and lucrative. Chain link fencing, ladders, soda cans (after all your giving up your daily soda, right?), you name it! The sky is the limit (so long as its metal) You can easily find your local scrap metal recycling plant at www.gotscrap.com

Use online rebate sites: If you regularly shop online then using an online rebate site like mrrebates.com or ebates.comis a smart idea. You can earn money back on items you regularly buy and put it in your holiday savings.

Now that you have learned a few ways to earn some cash, lets look at your options for housing your holiday savings.

Places to save your money

So now that you’re armed with a budget, a list and a plan; it’s time to decide what the best method of saving is for you. This decision is largely a personal one based on lifestyle, discipline and personal preference.

Open a holiday savings account

A holiday account is an account that many banks and credit unions provide. The idea behind this account is that it automatically withdraws a predetermined amount from your checking account and deposits it into your holiday savings account. The sum of what you have accumulated is deposited back into your checking account around November (dates vary). A holiday account is not used for overdraft protection, and it accrues interest, though not as much as a standard savings, or money market account. The benefit of using a holiday account is that you never see the money, and thus resist the temptation to use it.

Short Term CDs

If you have or will have a sizeable sum of money (think tax return), then you should consider a short-term CD (certificate of deposit). A starting investment amount for a short term CD is from $500 to $1000. There are several benefits to a short term CD. One being that it earns higher interest than a regular savings account. Also, because there is a penalty for early withdrawal, you are more likely to leave it alone until it reaches full maturity. The lengths of time for short-term CDs are typically six months to one year. Sometimes, you can even put a limited number of additional deposits into a CD as you save additional money. Contact your bank or credit union for more details as the rules for individual Certificates of Deposits may vary.

Use Envelopes

If you are a traditionalist and prefer to work with cash, this is the system for you! Use your list to write each name and allotted gift amount on individual envelopes. As you save money, put it into each envelope. When you have met the specified amount on the envelope, seal it. As you go throughout the year, your envelopes will be filled and sealed. This method is by far the most fun way to save for your holiday. You get to feel the excitement of watching each envelope grow while anticipating the upcoming holidays. The disadvantage of this system is that you do not earn interest, and it is not insured, so it’s your responsibility to keep it safe.

Don’t let over-spending; impulse buying and debt rob you of your joy. With so many options out there, all it takes is a little time, creativity and planning to create a debt-free and stress-free holiday.