No matter how much you plan ahead the holidays can be the most stressful time of the year, both emotionally and financially. Budgets, lists and schedules are all great ways to stay on top of all your personal and financial commitments during the holiday season, but sometimes things happen and life gets in the way. Over spending to the point of extreme debt is unfortunately commonplace during the holidays. For the majority if consumers it’s like a cycle that never ends, spend too much in December and then spend the rest of the year feeling guilt while trying to pay off several credit cards at once.
We want to arm you with the information you need to conquer, once and for all, your post-holiday debt before it spirals out of control. And, hopefully, teach you how to break the cycle of holiday debt.
- Switch to Credit Cards With low Interest Rates.
The majority of holiday debt resides on credit cards and most people have credit cards with high interest rates. This is one of the biggest reasons why it takes years to pay off ones years’ worth of holiday spending. It’s in your best interest to look into credit cards with low interest rates, you won’t have a lot of choice but if you can find one that works for you, it’s will be worth it in the end.
If you want to transfer a balance from a credit card you already have to one with a lower interest rate you need to be aware of balance transfer fees. This is where being informed and doing your research comes in handy. If the balance transfer fee ends up being very costly then it’s probably not worth it to you. Furthermore, some credit card companies will provider 0% financing for balance transfers but most of the time it’s only for the first 3 to 6 months. Just remember that this is a great option but if you don’t understand all the details and fine print you could end up spending more money than you thought.
- Return, Return, Return.
We aren’t condoning trying to retrieve the gifts you’ve already given or return the ones you were given, but what about those gifts you bought yourself while shopping for others. If you somehow ended up buying yourself more gifts than you bought your friends and family you need to consider returning at least some of them. Check your closet for the items that still have tags on them, look for your receipts and head back to mall. If you’re really serious about conquering your debt then you need to make some sacrifices, returning those shoes you got on sale is the perfect place to start.
- Participate in No-Buy January (and February)
The best way to start the new year is to take a spending hiatus. Treat your financial situation like a diet and cut back on spending and shopping. Focus instead on the things you already have and love. Challenge yourself to save a certain amount of money each month or to only buy the necessities for a whole month. Just like with a real diet you’ll need to keep yourself motivated by achieving certain goals and hitting new milestones. Once you’ve accomplished these goals you’ll be able to use the extra cash to put towards any credit card debt you might have. Empower yourself by taking control of your finances and cutting back on excess spending.
- Stop the Debt Cycle Before the Next Holiday Season
Once you cut back on spending, starting paying off your debts and get your finances under control, the next most important thing to do is stop the cycle. The worst possible thing to do is spend your whole year working towards your financial goals to then just repeat what happened during the last holiday season. To stop yourself from falling back into the holiday debt cycle you need to have a game plan and a budget that allows you to start saving for next December as soon as possible. If you’re prepared then the likelihood of going back into debt won’t be so high.
Start by putting aside some money each month; call it your holiday fund. Just a small amount each month over the course of a whole year will relieves some of the financial burden once next December arrives.
- Consider a Personal Loan
Finally, if you currently have several high interest credit cards that you’re trying to pay off but can’t quite seem to make a dent, then maybe you need to consider getting a personal loan. You’ll be able to pay off all your credit card debt and then make one easy payment to your lender, instead of several different payments to several different credit card companies. Furthermore, personal loan often have lower interest rates than many credit card companies which will in the long run save you a lot of money. If you choose to get a personal loan to help with your credit card debt it’s crucial that you stop using your credit cards to purchase items you cannot afford to pay for. Adding more credit card debt into your current financial situation will only make things worse.
Post-holiday debt can start to spiral out of control before you even realize it, that’s why you should make 2015 the year you conquer your credit card debt and break the holiday debt cycle. Start the new year by taking control of your finances.
