Many consumers started the new year with a debt hangover worse than last year. Consolidated Credit is encouraging consumers to adhere to a budget and reduce debt.
After a busy holiday season where consumers turned to credit for purchases they couldn’t otherwise afford. It’s rather common during the holiday season for consumers to spend money they don’t have, using credit cards instead of cash or debit cards. Even though consumer spending contributes to the country’s economic growth, it raises overall consumer debt – ultimately forcing a negative long-term impact on the economy.
According to the National Retail Federation, consumer spending rose to $471.5 billion, a 4.1 percent increase from last year. As the infographic shows, no other holiday came close to winter holiday spending, with a mere $16.3 billion spent on Mother’s Day gifts and $15.7 billion for Valentine’s Day. Father’s Day came in at only $11.1 billion and St. Patrick’s Day rounded out the list at $4.14 billion.
Black Friday and Cyber Monday deals fueled consumer spending this holiday season. Black Friday sales spiked 26 percent from 2010’s figure, rising to $816 million. Meanwhile, consumers spent more than $1.25 billion on Cyber Monday, up 22 percent from last year.
As the infographic shows, 24 percent of consumers are expected to carry higher credit card balances in 2012. This figure represents a 5 percent consumer debt increase from last year.
Consolidated Credit offers these debt reduction tips:
- Avoid accumulating new debt. Now is not the time to apply for new credit cards or loans. Focus on paying off debt already established. It’s difficult to get out of debt when new debt is mounting. Use cash for purchases rather than credit.
- List all debts. Make a list of all credit card accounts, include the account number, interest rate, outstanding balance, payment due date, credit limit and the minimum payment. Not only does this keep things organized but it better prevents bills from being late or unaccounted for.
- Pay off high interest rate debts first. The most efficient way to resolve debt is by paying down the highest interest rate balances first. Once high-interest debt is paid down, tackle the next highest, and so on. Continue paying the minimum due on all other debts.
- Start saving for the 2012 holiday season. Open a holiday savings account to set aside money for 2012 holiday spending. Prioritize what is most important and look for areas to cut costs, such as entertaining less or giving home-made gifts.
- Don’t hesitate to ask for help. There are reputable debt-counseling agencies that consolidate debt and teach individuals to manage their finances better. Consolidated Credit conducts free budgeting analyses and dispenses free advice on a daily basis. If someone needs help they can speak with a counselor with no obligation or visit ConsolidatedCredit.org.
Consolidated Credit, founded in 1993, is one of the nation’s largest credit counseling organizations in the country and has helped over 5 million people with financial issues. Their mission is to assist families throughout the United States in ending financial crisis and solving money management problems through education and professional counseling.