People spend more money around the holidays than any other time of the year. If you’re like most of us, you probably put some (or maybe a lot) of your holiday expenses on credit cards. The holiday season may be over, but by now those dreaded post-holiday bills are arriving in the mail.
If your holiday credit card bills are more than you expected, don’t worry. These tips will help you get back on track.
Return unused items
One way you can immediately reduce your debt is to return anything you didn’t end up opening or using. While saving unused gifts or decorations for next year seems like a good idea, it’s likely you’ll forget you even have it and you’ll be paying interest via your credit card, on an item that you’ll never even use. Instead of squirreling gifts away take them back to the store and make a dent in those holiday balances. Be sure to dig out all of your receipts so you get back the full price you paid for the item.
Have a plan
It’s hard to tackle debt without a plan. Sit down and figure out how much you owe, the interest rates on each of the cards you used and when your payments are due. Then decide how you’re going to pay it off. One way is to pay the smallest balances off first. It can be very motivating to watch your debt go down. If motivation isn’t a big issue, then you may want to focus on paying the highest interest cards off first. These are the cards that will cost you the most in the long term. Either way, find a plan and stick to it.
Always pay more than the minimum amount
Minimum payments are designed to keep you in debt for as long as possible. In the long run, you will end up paying interest on interest charges, often paying double what the original price of an item was when you purchased it. For that reason, part of your debt plan should be paying more than the minimum amount every month. If you don’t have a lot of money left over to focus on debt reduction, don’t worry. Even $5 or $10 extra a month can make a huge difference in paying down your balances.
Stop charging things
Continuing to put things on credit will only add to your troubles. If you’re in the habit of charging things, this can be a tough habit to break. However, you’ll end up paying more in the long run through higher minimum payments, interest, and fees. Put your credit cards away, use cash instead, and focus on paying down your debt instead of adding to it.
Consider combining balances
If you have multiple credit cards and decent credit, you may want to consider combining the balances onto one card. Many credit cards offer promotions for transferring balances, including no interest for a certain amount of time. This will allow you to make one payment instead of spreading it over several cards. This only works if you put the other cards away, so that you don’t just end up with more debt than you had in the first place.
The most wonderful time of the year doesn’t have to be followed by the most miserable time of the year. If the post-holiday bills (and blues) are setting in, hopefully these tips can help you get your holiday debt under control and get you back on track financially.
If you are ready to step off the holiday overspending train, this podcast with LIT, Bonnie Hooley discusses ways to avoid Christmas debt hangovers.
If, however, your debt problem is one that has lingered for some time, and simple fixes like those above have not solved your problem, then it is likely time to seek professional help. Licensed Insolvency Trustees (LITs) such as ourselves, have the training and experience to help you solve even the most persistent debt problems. For a free consultation, give us a call.
Jillian Taylor-Mancusi, LIT
