Advice from Consolidated Credit on the Best Way to Tackle the Payback
Christmas 2010 could go down as the holiday season that Americans spent, spent, spent, despite the recession. According to retailers people spent more than expected on family and friends and indulged themselves as well. The changes credit card issuers made in response to the Credit CARD Act of 2009 has forced people to look at their credit situation more carefully yet spending for the holidays has greatly exceeded expectations.
Soon the holiday greeting cards will be replaced by holiday bills. Money management will be the key to gain control of finances for those who ran up holiday debt. Many people do not plan their holiday spending, even though it is a major annual expense. As a result, these expenses often end up on credit cards that can take well into the New Year to pay off.
If you overspent at the holidays, try these tips to reduce debt.
- Stop using your credit and charge cards.
Use cash when possible to pay for food, clothes, utilities, rent/mortgage and other necessities. Keep your credit card charges to a minimum until you pay off your holiday debt.
- Add up your holiday charges.
On a sheet of paper or with the use of a computer spreadsheet program, create columns for each credit card, the amount outstanding and the annual percentage rate. This will tell you how much money you owe.
- Develop a repayment plan.
Decide how much money you can devote each month to pay down your holiday debt. Look for ways to shave expenses to set aside an extra $50, $75 or $100 a month to reduce your holiday debt. You might consider reducing long-distance calls, eliminating subscriptions and eating out less often. You could also have a garage sale or get a part-time job.
- Stick to your plan.
Pay off the credit cards with the highest interest rates first. You might also investigate the possibility of transferring bills to credit cards with lower interest rates.
- Create a plan for the 2011 holiday season.
One of the major causes of holiday debt is a lack of planning. Consider opening a holiday account to save for the holidays in 2011. Use your 2011 expenses as a starting point for what you will need next year. Take the time to prioritize what it most important to you and look for areas to shave costs, such as entertaining less or giving home-made gifts.
During the holidays, it’s easy to get caught up in the spirit of the season and spend beyond your means. If this happened to you, treat this as a learning experience and resolve to do better this year. If you need help, call Consolidated Credit at for free financial advice.