Save $1,000 by the Holidays

In September, my daughter and I were in one of those large craft stores and she noticed that holiday merchandise was on display. "Mom, why are they selling Christmas stuff already?" she asked. My response (because she's 6 and I needed to keep it simple): "Well, I guess some people just like to get a head start on the holidays."

In reality, retailers are rolling out Christmas items early in hopes that consumers will buy them at full price now rather than wait for discounts closer to the holidays. Rather than take the bait, you should consider getting a head start on your holiday savings instead. That is, by trimming some costs over the next two months, you can save up to $1,000 or more to finance your holiday gift giving and celebrating with cash rather than credit.

The actual savings in the examples below will vary (especially depending on which ones you can implement). But they do show it is possible to find an extra $1,000 in your budget over two months. Be sure to share your money-saving tips in the reader comments box below.

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Adjust your tax withholding. The average tax refund this year was nearly $2,900. If you got a refund, stop paying Uncle Sam too much throughout the year and keep that money for yourself. You simply need to change your tax withholding by filing a new W-4 with your employer's human resources department. To find out how many withholdings you should be claiming, try our Easy-To-Use Tax Withholding Calculator. The changes will go into effect on your next paycheck.

TWO MONTHS OF SAVINGS = $484 (based on the average refund)

Ditch the premium cable TV package. When I canceled my expensive premium cable package and opted for the cheap, basic service, I started saving $80 a month -- more than $950 a year. See Cut the Cable Cord for sources of free or cheap programming and movies. (Note: I kept basic cable service to score a discount on my phone and Internet services.) If you're not willing to give up cable, you might be able to get a discount from your provider just by suggesting that you are ready to cut the cord. Kiplinger.com Managing Editor Robert Long got his cable company to knock $17 off his monthly bill by hinting that he wanted to switch to a much-less expensive package or to even find a new provider.

TWO MONTHS OF SAVINGS = $160

Increase auto insurance deductibles. Increasing the deductibles on your comprehensive and collision coverage from $500 to $1,000, or even $2,500, can reduce your premiums by 12% to 18%. For example, boosting the deductibles from $500 to $1,000 would mean a savings of $648 per year, on average, for a family with two teenage drivers in northern California (which has a competitive auto insurance marketplace), according to the database at InsWeb, an insurance Web site.

TWO MONTHS OF SAVINGS = $108

Dine out less. You've heard it 100 times, but I'm gonna tell you again: You'll save big by eating your meals at home. If you spend about $50 on a dinner for two every time you go to a restaurant, you can save $100 just by eliminating one night out a month.

TWO MONTHS OF SAVINGS = $100

Live off your grocery stockpile. If your pantry and freezer look anything like mine, you probably have enough food to last you a couple of weeks. So skip one weekly trip to the grocery (at a cost of about $100 for a family of four), and put those canned goods and frozen foods to use.

TWO MONTHS OF SAVINGS = $100 (if you can live off your stockpile for a week; $200 if it'll get you through two weeks)

Find free babysitters. Round up another family or two and take turns watching the kids. If you go out for four hours every month and would have paid a baby sitter $10 per hour, you can save $40 per month. All you need to do is watch the other family's kids occasionally -- which gives your children a few extra playmates.

TWO MONTHS OF SAVINGS = $80

Drop your land line. If you're paying $25 a month (AT&T's current rate for unlimited long-distance calling) for home phone service but rely mainly on your cell phone, eliminate this monthly expense.

TWO MONTHS of SAVINGS = $50

TOTAL SAVINGS = $1,082

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