10 ways to pay cash for Christmas

By Liz Pulliam Weston

A debt-free holiday is within your grasp.

It wasn't necessary to start saving last January. You don't have to give up the mall or make all your gifts. You may not even have to leave your credit cards at home.

There are at least 10 ways you can come up with the money to pay for your December celebrations without adding to your debt:

1. Adjust your withholding

Most taxpayers get some kind of refund every year, and the average amount is well over $2,000. Chances are you could crank way back on your withholding for the rest of the year, seriously boosting your take-home pay, and you'd still wind up getting at least some money back in April. Kiplinger has an easy-to-use withholding calculator that shows how much more you could get in your paycheck throughout the year by claiming extra allowances; the Internal Revenue Service has a more detailed version that can help you fine-tune your withholding to maximize your December paychecks without risking having to pay on April 15.

If you're going to do this, don't wait; you'll need to submit your new W-4 in time to adjust your remaining checks. Make a note to re-evaluate your withholding in January; you can switch back to your old habit of over-withholding, or you may decide to keep the extra money throughout the year rather than getting a refund.

2. Use your miles

More than 120 million Americans participate in at least one frequent-flier program, according to Randy Petersen of WebFlyer. You typically can't turn miles into cash directly, but you have options beyond trying to use them to get a free flight.

Many plans allow you redeem your miles for merchandise, for example. The exchange rate on these deals isn't all that great, but if you have a surfeit of miles, the miles are about to expire or you won't otherwise use them, it's certainly an option. Northwest Airlines allows you to redeem WorldPerks miles for magazine subscriptions, for example, while elite United Airlines mileage-program members can trade miles for portable DVD players and other electronics. Check your plans' Web sites for details.

Another alternative is to convert your miles into a program you do use. WebFlyer has a mileage converter to help you explore your options. For example, you can convert 20,000 American Airlines miles into 40,000 Hilton Honors points, which will pay for one or two nights in a Hilton property. If you were planning to stay in a hotel anyway over the holiday, let your miles pay for it and convert the money you would have otherwise used into cash for the holiday.

3. Ransack your rewards

Most credit card offers these days come with some kind of rewards program -- frequent-flier miles, cash back, points toward travel or merchandise. Many cards allow you to convert rewards into merchant gift cards, which you can use to buy real gifts.

Check your cards' Web sites or call their toll-free numbers to see what your rewards will get you and whether they're running any special offers. Right now, for example, Discover Card is running a "Holiday Mall Promotion" that offers $20 gift cards for every $200 you spend on your Discover Card at select malls around the country.

• Tell us: What's your budget for kids' Christmas presents?

One big caveat: If you're already carrying credit-card debt, don't add to it. Pay cash for the holidays. You should be particularly wary of adding any charges to a card that already has a balance, because there's no grace period -- interest charges on these new purchases start immediately.

4. Use your coins

Raiding the change jar to pay for Christmas isn't exactly new, but Coinstar change-counting machines have made it easier. You can avoid the machine's usual 8.9% fee by selecting one of its gift-card options for merchants including Amazon.com, Starbucks, Circuit City, iTunes and AMC Theatres.

If you don't want gift cards but do want to avoid fees, check with your local credit union to see if free coin counting is available. If you live in the Northeast or southeastern Florida, you can check out the nearest Commerce Bank lobby, which typically offers a free "Penny Arcade" coin-sorting machine. (Call 888-751-9000 for locations.)

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