Holiday debt can be worse than any New Year’s hangover.
During the festive time of year, it’s easy to go overboard with spending.
Gift-buying, grocery shopping, hosting, travel – it all adds up, and when the bill comes in, you can be in for a nasty surprise.
What happens to that debt in the weeks or months (sometimes even years) to come can define your personal finance.
Last year, a shocking 75% of shoppers said they wouldn’t pay their full balance off at the end of January.
Over half said they would do it within three months, but 15% said they would only make minimum payments.
Minimum payments are a path to financial disaster.
If you’re stuck, try these tips to crush your holiday debt.
1) Reduce Your Interest Rates
Those high balances on your credit cards can be scary, but what’s really killing you is the interest rate.
When you owe so much, it can be hard to see how much interest is holding you back because it gets paid off first.
If you want relief from interest charges, get help from the experts.
Certified Credit Counsellors from a non-profit counseling agency can help you consolidate your debt and negotiate with creditors for lower or zero interest rates.
2) Deal with Debt Immediately
Credit cards make it really easy to dig yourself into trouble.
Let’s say you get a new credit card with a $5,000 limit.
More available credit is great for your credit score (until you use it), and it’s perfect for big expenses like airfare.
But in that first month, you get takeout a couple of times a week, fill up the gas tank, and maybe put your groceries on plastic a few times.
At the end of the month, the bill comes out to a surprising $1,200, but you’ve only got $700 in the bank to pay it off.
Luckily, the minimum payment is only $35. It could be even less!
Instead of paying $700, you pay $35, and now you’ve got the beginnings of a crisis.
Debt should be paid in full as quickly as possible.
If the holidays have left you in the red, you need to put paying that money back a top priority, well ahead of any wants.
3) Sell Unwanted Belongings
Sometimes your finances just need a quick shot in the arm.
You can raise a bit of money by selling unwanted belongings through online classifieds – the modern garage sale.
The New Year is the perfect time to sell all those gifts you haven’t touched since you unwrapped them.
If you do decide to raise a bit of money by selling belongings, you have to commit to putting all the proceeds toward your debt.
Remember, if you don’t treat it like a priority, it’s not going anywhere any time soon.
Leave holiday debt behind you.
Cut the cost by reducing your interest rates, make paying it off a priority, and try raising money to get rid of it sooner than later.