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Avoid credit card debt.

QUESTION: How can I avoid accumulating credit card debt over the holidays?

ANSWER: Too many people find themselves with a large amount of credit card debt after the holidays, thinking they’ll pay the balance with their tax refund. When you think about it, getting a refund check means that you let the IRS use your money throughout the year without paying you any interest. One option is to adjust your withholding so you have more money in each paycheck instead of “loaning” the money to the IRS and having to wait for a refund. But don’t go overboard. You should only lessen the periodic tax withholding to match the expected refund so you won’t end up owing money unexpectedly. You can also adjust your withholding for a limited time, so you can increase your paycheck leading up to the holidays and then readjust your withholding in January. The IRS offers a Withholding Calculator, which lets you see how a change in withholding will affect your pay check. It’s also a good idea to check with your tax professional before making any changes.

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