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Tips for Paying Off Holiday Debt
No matter how much you may enjoy the holiday season, it is not unusual to feel a tiny bit of relief when it’s finally over. Presents have been opened. Numerous functions attended. Out of town relatives have returned home. All the usual rigmarole associated with the holiday season comes to an end and you get to return to your normal day-to-day existence.
But before you can do that, you need to address how much it cost you to get through the season. Buying presents for everyone from your co-workers to Aunt Dee’s new baby has probably left a crimp in your checkbook…and maybe even a few hits on your credit card.
Watching spending and not buying more than you can immediately pay for is the only sure way of avoiding debt, but it’s not always easy to do. After all, it is the “season for giving”, and you want to be generous. Depending on how much self control you exercised, your debt could be a little or a lot. If you find yourself in the position of having spent more, or way more, than you could actually afford, it may help to follow these tips for paying off holiday debt.
Take Stock of Your Situation
Sit down and gather all your bills and credit card statements. Add them all together to get a handle on exactly what you owe. Don’t leave anything out. Including even the smallest debt is necessary to climb out of the hole you’ve dug. Determining the full extent of the damage is the first step toward your goal of paying off your holiday debt.
Income vs. Outflow
Having assembled all your bills and totaled them up, you now know how deep you’re in. The next step is to compare that with what’s left of your income after taking care of everyday bills like the mortgage, car payments, food, and utilities. It could seem like you’re at the bottom of a money pit, looking up. Don’t give up. Even the highest mountain can be climbed one step at a time.
Budgeting is the Key
Having determined just how much holiday debt you’ve incurred, and matched that with your extra cash, the next step is to work out a plan to pay off the bills. Making more than the minimum payment on each credit card is necessary if you want to avoid excessive interest charges. You may be better off taking out a low interest loan to pay off the bills and downsize to just one payment a month. An alternative is to pay the minimum on each card except one. Pay that card off as quickly as possible; then do the same with your other cards until you catch up.
Avoid New Debt
In order to pay off holiday debt as quickly as possible, it’s a good idea to live within your means. Steer clear of adding any additional charges to your credit cards until you’ve caught up. Cut out small things. For example, instead of going out to eat, stay home. It’s cheaper, and your debt will decrease quicker.
Additional Income May be Needed
Depending on just how much you’ve splurged, bringing in more money may be necessary. Taking a part time job until the bills are caught up is an option. Selling off unused items, like the bicycle you never use or the old furniture you’re keeping in storage are other ways of bringing in money that will help pay off your debt.
Seeing is Believing
Take a look at each credit card bill as it comes in. Keep track of how much debt remains each month. If you’ve carefully avoided adding more to your credit card debt you’ll undoubtedly notice the total owed is less than last month. This will more than likely motivate you to continue making payments.
Something to Remember
After going through the hassle of paying off your holiday debt, consider starting a dedicated savings account toward next year. You’ll be glad you did.