Start Saving For Christmas

Thousands of us end up in debt every year due to overspending at Christmas - but by preparing in advance you could avoid having to borrow money. Check out these tips!

Christmas is coming, the goose is getting fat....ok don't throw anything at your screen just yet! Although this may seem like another lame reminder that Christmas is on its way, three months too early, there is method in my madness.

And why? Because if you're one of the many people in the UK who started off 2007 with a hefty credit card bill, chock full of transactions for festive treats you could barely even remember, I'll bet you vowed you wouldn't let that happen again.

Here are some steps which could help ensure this Christmas doesn't become a financial crisis for you.

Plan and Budget early

To really do this properly you need to start early, Fool. Ideally, we'd all set aside a few pounds every month into a Christmas fund, so come December we'd have a lovely lump sum to play with. But not to worry -- we still have some time to go.

Firstly, work out where you will be spending Christmas. That way you'll know if you need to buy food and drink as well as presents.

Now look at your budget and work out how much you can realistically afford to set aside each month or week. By stashing your money in a high interest account that pays interest monthly, such as Icesave (currently paying 6.2% APR) you'll at least make a little interest on your cash.

Economise

If you're struggling to find much extra cash, why not try and economise wherever possible? Check out these tips and you could save money on your bills and household costs.

Food & Drink

If you're cooking Christmas lunch, the key is to be organised. Write a list of everything you need and stick to it. If you're managing on a tight budget, why not ask all attending to make and bring one dish or dessert (or wine)? Not only will it reduce your stress on the big day, it'll cut costs significantly too. And stock up on non-perishable items early if you see offers on (for example, Tesco currently has 50% off a number of wines in its Wine Festival).

Additionally, a number of retailers such as Wilkinson, Woolworth's, Tesco and Somerfield offer savings stamps schemes. Buy stamps throughout the year and come November/December time if you've saved enough stamps your balance will be boosted (for example, Tesco adds £1 if you save £49). If you know that you'll spend a lot in one place come Christmas this can be a nice boost, so check out the individual retailer's schemes.

And don't forget those reward schemes -- if you have no other use for your reward vouchers you could save them up to effectively cover a free, pre-Christmas shop (although you typically get better value for money elsewhere). Supermarkets also seem to issue extra points coupons like crazy in an effort to get us to shop with them in the run up to Christmas, so by planning carefully, you can boost your points balance enormously.

Presents

If you're on a really tight budget but have a large number of people to buy presents for, why not agree in advance to only buy gifts for the children (your friends would probably appreciate the saving too). Alternatively, why not do "Secret Santa" (each person draws a name out of a hat and has to buy that person a gift) so that everyone has something to open on Christmas morning?

Work out how much you can afford to spend per present and then look out for special offers and deals in the run up to Christmas to actually buy them -- you'll get more for your money. And don't forget that those reward points again could be used to buy magazine subscriptions, theatre vouchers and other gifts, effectively for nothing.

Or why not make your presents - jams, chutneys and home made chocolates can go down very well while not costing very much.

Decorations

You really don't need to spend a lot to decorate your home - indeed believe that less is more. Make sure you re-use any decorations that you've bought in the past, check out ebay or watch sites such as Freecycle - Christmas trees often pop up as people upgrade theirs. You can pick up cheap fairy lights from places such as supermarkets, Woolworth's and Wilkinson (better still, do without this year and pick them up for a fraction of the price in the January sales!).

Or why not try making your own decorations? You can entertain the kids at the same time by getting them to make and decorate cookies in the shape of stars and snowmen to hang on the tree, or spray fir cones.

Extras

If you're good with your money and always pay bills on time, you could look into taking out a cashback credit card, and earn a small percentage of what you spend back as cash. And the very organised could consider a 0% card for new purchases - by spending on the card you can leave your money sitting in a high interest account for up to a year, and reap the interest earned before simply clearing the card balance when the 0% period is up.

Additionally, there are a number of cashback sites that promise to give you cashback if you spend through one of their affiliated retailer partners (beware however, that you'll probably need to earn a certain amount of cashback before actually seeing any cash).

The bottom line is, Christmas day is all said and done just another day, and to get in debt to celebrate it is insane. If you're on a tight budget remember that your friends and family would probably far rather eat baked beans on toast with you, than think you'd borrowed money to provide the best produce and fancy gifts money can buy.

Be honest, explain you're on a budget early and you'll probably find everyone else is relieved at not having to spend a fortune either!

And as a final note, don't forget that kids can see Santa Claus in his grotto in Harrods this Christmas for free, simply book a time and date here.