Holidays
Now's the time to start paying off those pesky holiday bills.
Now that you've finished your holiday shopping and most likely opened your gifts, it's time to get back to reality and pay off those pesky holiday bills, experts say.
The average U.S. consumer was expected to spend from $450 to nearly $800 on holiday gifts this year, according to various retail forecasts.
Consumers tend to overspend this time of year, charge up their credit cards and not think about the damage they've done until later, said Howard Dvorkin, founder of Consolidated Credit Counseling Services Inc. and author of "Credit Hell: How To Dig Out Of Debt."
"In January, they're like, 'What happened?' when they get the bills," Dvorkin said. "It can be a tough time of year."
About 65 percent of U.S. consumers carry a credit-card balance from one month to another, and many are still paying off debts from past holiday seasons, he added.
"I call it the ghost of Christmas past," Dvorkin said.
Westsider Stephen Rapp, 25-year-old president of El Paso Valet, says he creates a holiday budget, sticks to it and avoids using his credit card "at all costs."
"I have only one credit card, and that's for emergencies, like my car breaks down and I can't afford to fix it," Rapp said. "If I can't afford it, I don't buy it."
To get your holiday bills under control, come up with a plan to tackle them as soon as possible, experts say.
"A lot of people are hesitant to open their credit-card bills when they know it will be bad news," said Maureen Hankins, director of the El Paso YWCA's Consumer Credit Counseling Service. "Open them. Don't put it off."
El Paso certified public accountant Steve Rash said many people tend to overeat during the holidays and the "same principle is at work with your finances."
"So cut back on your expenses in January and February and use that money to pay off your debt," he said.
Some steps to pay off your credit cards, deal with your holiday bills and take better control of your finances in 2007:
· Get an idea of exactly how much you spent on the holidays. Put your bills out on a table and add them up.
Then, make a plan to liquidate that debt as quickly as possible.
· Make paying off your credit cards a top priority for the New Year, said Greg McBride, a senior financial analyst with Bankrate.com.
Start with your highest-rate card and start paying that off, experts say. The key is to make more than the minimum payments. If you only pay the minimum, you'll find it virtually impossible to get out of debt.
· Consider transferring your balance to a lower-rate card, but be careful. Read the fine print and know when the low-interest introductory rate is set to expire.
Make sure you understand that this is just the first part of a two-pronged attack on debt, McBride said. Don't get in the "transferring" habit without cutting into the principal.
Typically, you will pay a 3 percent balance transfer fee, McBride notes.
"This raises the cost of actually treading water with your debt," he said. "If all you're doing is transferring debt from one card to another to another and not making any headway, these balance transfer fees end up becoming a real cost."
You might want to call up your current credit-card company and try to negotiate a lower rate, Rash said.
· Vow to do a better job in 2007 and start saving now for next Christmas.
Add up what you spent on gifts, traveling, parties and decorations and divide that total by 12, Rash said. That will give you a monthly savings goal so you can avoid having to charge your holiday expenditures next year, he said.
