Take a Pass on Holiday Debt

With all the traveling, entertaining and shopping, the holiday season can put a strain on your cash flow. To avoid a rough, debt-burdened start to 2013:

• Be smart about air travel. That means shopping around for the lowest fares using sites such as kayak.com. Bing.com has a price predictor features that help you decide when to buy. Keep in mind that some airlines, such as Southwest, may not appear in the search results. It also pays to be flexible on travel dates. Tip: You may get a real steal by flying on the holiday, such as Thanksgiving or Christmas Day.
• Create a gift-buying budget. Write down what you plan to buy and set a dollar limit for each item. Think twice about doing your shopping a day or two before the holiday. Overwhelmed by the mix of deadline pressure and holiday euphoria, you may find yourself busting your budget.
• Make cash your king. To avoid racking up credit card debt, use only debit cards and cash for holiday spending.

Plan Your Legacy

Thinking about your mortality is anything but pleasant. What's worse? Leaving your spouse or loved ones to face the legal obstacles of settling your estate because you didn't have a plan. You can make your survivors' jobs much easier by working with a qualified attorney to create a legacy plan that includes these documents:

• A will to provide legal instructions for distributing your investments, property and possessions after your death. It can also be used to identify a guardian for your minor children.
• A durable power of attorney to authorize someone to make financial and legal decisions on your behalf if you're disabled or incapacitated.
• A health care power of attorney to give someone the authority to make medical decisions on your behalf.
• A living will to document your wishes regarding certain types of medical treatment, such as life support or artificial nutrition, in the event you become terminally ill.
• A letter of instruction to help surviving family members put your affairs in order, from making funeral arrangements to canceling credit card accounts and paying other bills. It even can include personal thoughts and instructions such as how to care for a prized orchid collection or what's in a safe-deposit box. Unlike the other documents listed, a letter of instruction is not a formal, legal document.

Depending on your needs, your attorney also may recommend the creation of a trust, which is a financial planning tool that holds your assets for the benefit of one or more beneficiaries.

Don't forget to update your beneficiaries on life insurance policies, annuities, IRAs and other retirement accounts.

Review Your Medicare Options

Oct. 15 to Dec. 7 is your chance to join a Medicare Part D prescription drug plan. If you already have a Medicare Part D plan, this is also the time to review your coverage and decide if you should stay with your existing provider or make a change. You can switch from one Medicare Advantage Plan to another, or from original Medicare to Medicare Advantage or vice versa.

The Medicare Plan Finder helps you compare Medicare health and prescription drug plans in your area. In this tool, you can check a plan's star rating, a federal measure that evaluates plan performance based on more than 50 attributes.

If you're happy with your Medicare choices, you don't have to take any action to renew your coverage for 2013.