Q. I spent a little more than I wanted to over the holidays and I used credit cards that I would rather not look at the bill right now. Does the BBB have any advice on how to manage or save money so the same thing doesn't happen again next year?
A. Now is the time to plan ahead so the 2013 holidays are merry and bright, not overshadowed by looming debt.
Starting a Christmas Club account might be the perfect way to get your finances off to the right start this New Year. The Better Business Bureau is advising consumers to plan ahead and make the upcoming year's holiday season easier on the family finances by setting up a Christmas Club account now.
Traditionally, Christmas Club accounts have been offered at credit unions and most banks.
Customers can set aside a small amount of money every month into a savings account until the fall, when they can then start making withdrawals to pay for holiday expenses. Along with taking the time to shop around for the best interest rate, it is also important to read all of the fine print that accompanies such an account.
BBB recommends that it is never too early to consider budgeting for next year's holiday season and offers the following advice on setting up a Christmas Club account:
• Build a budget and stick to it. Consider how much you spent in the previous holiday season to help anticipate how much you will want to set aside every month.
To help you budget for the holidays, BBB, along with ClearPoint Financial Solutions, has developed an interactive budget tool that includes a holiday spending calculator: http://video.bbb.org/clearpoint-holiday-tips/clearpoint-holiday-budgeting-calculator.html.
• Start saving now. The sooner you start setting aside money every month, the better. By setting up a Christmas Club account in January or February you will benefit more from the interest rate and start the year off on the right foot.
• Shop around and ask around. While the interest rate on Christmas Club accounts is not typically very high, it can vary, so shop around for the best deal.
• Read the fine print. Christmas Clubs are essentially short-term savings accounts, but there are a few details that make them different. In some cases, there might be a minimum required deposit to open the account, or a minimum amount you must deposit every month. In addition, there is often a financial penalty for withdrawing the funds before the holiday shopping season arrives.
• Automate the process. Most Christmas Club accounts allow for monthly automatic deductions from your bank account or paycheck. This helps lessen the pinch. Just make sure that you do not set aside so much that you run the risk of overdrawing on your accounts.
Get answers to your questions each Friday from Jim Winsett, president and CEO of the Better Business Bureau Inc., which serves Southeast Tennessee and Northwest Georgia. Submit questions to his attention by writing to Business Editor Dave Flessner, Chattanooga Times Free Press, P.O. Box 1447, Chattanooga, TN, 37401-1447, or by emailing him at dflessner@ timesfreepress.com.