How to Manage Your Holiday Debt

Before the holidays we all heard the endless advice about setting a budget and sticking to our shopping list. I won't ask who didn't listen to that advice. Like many of you I bought a few things outside my budget and how have to deal with the credit card and bank statements arriving in the mail this month.

Manage Holiday Debt

But this is not the time to get sad. Let's get into action with a New Year financial-management makeover! Andrea Woroch, a consumer and money-saving expert, has provided 8 tips for balancing 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.
According to a Consumer Reports poll, 6% of us are still paying off holiday debts from 2010. That means any new purchases 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. This year start making changes to be as debt free as possible.

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