Rules? Yes. Before you buy anything, you need to lay down some basic rules for how you will use your credit cards - and be tough enough to stick to those rules.



First, you'll want to set spending limits. Take a realistic look at your finances. How much can you afford to spend on individual gifts without digging yourself into a hole of debt? Whether it's $20 or $120, set your limit and stick to it, even if you notice something at the last minute that so-and-so just couldn't live without! Think of the spending limit you set as a law, not a guideline. This limit will keep you from carrying a large balance on your holiday purchases. (Trust me, you don't want to be paying off those Christmas presents in July.)

And when you do set your spending limit, be sure to include everything you consider essential for the holiday season. If you regularly send out holiday cards to friends and family, include those. If you're hosting Christmas dinner this year, include the total price of the meal. Trees, decorations, and small gifts for co-workers and others should all be factored into your holiday budget. You don't want any last-minute financial surprises; they're usually bad.

Next, decide where you want to shop. If you have retail store credit cards that offer discounts or rewards, decide whether it's in your best interest to use those. Don't wait until the last minute to do your holiday shopping. You're more likely to make intelligent purchases if you're not panicking about the date. Also, by doing your shopping year-round, you're able to take advantage of sales as they come. (Think Fall sales, Back to School sales, Summer sales, etc.) By spacing out your purchases over several months, you will have more time to comparison shop and decrease your chance of charging a lot of last-minute purchases that you can't pay off quickly.

Finally, pay off your credit card balance as soon as possible. This is a good rule to follow any time of the year, but especially around the holidays. You don't want those great holiday prices to get inflated by interest and fees. Try to pay off the balance each month. If you have to carry a balance, pay it off as quickly as you can. If you foresee a credit card balance, try shopping with a low-interest card. Also, be realistic. If you've gotten into debt that won't be paid off within a few months, check out some of the balance transfer credit cards. You can get good deals and minimize the amount of money you throw into interest and penalties.

Personal finance experts have a name for the traditional overspending we tend to do this time each year: Holiday Hangover. That brings to mind headaches and nausea, and for good reason; if you're spending most of your year paying off credit card debt from the previous holiday season, you're probably sick of it!

Holiday spending doesn't have to be that stressful. As long as you can honestly assess your financial situation and follow your spending rules, you should have a happy, debt-free holiday season.