How to Manage Your Holiday Debt...

If you are anything like me you sit wondering where the time went. I don’t have the answer, but it sure did go fast, didn’t it? One minute I was sitting down preparing Christmas lists, meals and making other Christmas arrangements and the next minute I am cleaning up wrapping paper and taking down the tree. It seems we spend so much time and money preparing for the holidays, but they are over in the blink of an eye. I know some people say they are happy when the holidays are over, but I am always a little sad.

After the holidays we are left with a very skinny wallet and a lot of debt, am I right?

We have some tips for how you can manage your holiday debt so that you won’t be trying to play catch up the whole year long.

It seems like before the holidays there was a ton of advice about setting a budget and sticking to a shopping list, but we want to make sure you have a little help sticking to a plan for the debt AFTER the holidays are over.

According to a Consumer Reports poll, 6% of us are still paying off holiday debts for 2010. That means any new purchases you just racked up over the past holiday season will inflate those interest charges and make paying down the old and new balances more difficult and expensive. (Yikes!)

If the bottom line on your bills is looking ugly, it’s time to get a financial-management makeover. Consider these tips for balancing your holiday debt.

1. Double and Triple Up
Multiply your credit card minimum payments two or three times to reduce the amount of interest you’ll end up paying. Merely meeting the minimum means you’ll never see bottom.
2. Now’s the Time to Negotiate
Talk to your credit card company about negotiating a better rate on interest, fees and other expenses. If your interest rate is above 15 percent and they won’t negotiate, it may be time to transfer much of the balance to a lower-cost card. Just make sure you pay off the debt before the interest rate climbs again.
3. Go On a No-spend Diet
Stick those credit cards in the freezer, if you have to, but do what it takes to avoid impulse shopping sprees. Better yet, give them to a trusted friend or family member for safekeeping.
4. Get Couponing
Using coupons for necessary purchases not only saves you money, but the practice helps you make more educated purchasing decisions. You can find online and printable coupons for thousands of stores on CouponSherpa.com, or download their mobile app for instant access to coupons while you shop.
5. Stick to Cash
There’s something about parting with greenbacks that makes us less likely to spend. Keep a budgeted amount on hand and stay away from the cards. Using the envelope system is especially helpful in tracking your cash spending while working toward financial goals.
6. Cut Back on Luxuries
You’ve had your fun during the holidays; now it’s time to get serious. Cut out the restaurants, nail salon and triple shot mocha latte until the bills are under control. Of course, too strict of an economic diet is as easy to break as a weight-loss regimen. So figure in an occasional, small splurge to keep you going.
7. Set Small Goals
Don’t try to do everything at once. If paying off credit cards in three months means going hungry, you’re biting off more than you can chew. Set smaller, obtainable goals and you’ll appreciate the final results more. For those with multiple credit cards with high balances, try paying down one card at a time to feel that sense of accomplishment needed to push on to the next goal.
8. Meet With a Financial Planner
If you’re barely treading financial water, it’s time to get some assistance. A professional financial planner can help you establish a reasonable plan that won’t leave you paying off debts until next Christmas. You can find a qualified guide through the Certified Financial Planner Board of Standards website or you might check for non-profit assistance.

I hope that these tips help in some way and that you are able to stay on track into the New Year!

(The above post has tips and information in it that were provided to me by Andrea Woroch, a consumer and money-saving expert who has been featured among top news outlets such as Good Morning America, NBC’s Today show, MSNBC, New York Times, Kiplinger Personal Finance, CNNMoney and many more!)

Leave a Reply Cancel reply