Now that the holidays have come to an end, you may be experiencing a “holiday debt hangover.” Maybe you were overly generous with gift-giving this year. Or perhaps you got carried away celebrating the season and indulged a little more than your checking account could handle.
Either way, the New Year is upon us, and that means last month’s credit card bills will soon be piling up. You might be feeling anxious about how much you put on plastic during the holidays, but don’t despair. Instead, take charge of your finances and develop a plan to eliminate holiday debt responsibly by following these simple tips.
First, don’t wait around to he sooner you come up with a repayment plan, the better. Figure out just how much you owe, taking a look at all of your bills in order to get an accurate picture of your debt. Do this now, not later, because the longer you wait, the more you could end up paying in interest and fees.
Prioritize your expenses
Prioritize what’s important. Your essential monthly living expenses–including housing, food, and car payments–should be at the top of your spending list, followed by credit card payments.
If you have cards with low balances, consider paying those off first so you have fewer accounts to juggle. This is what’s referred to as the “debt snowball” method.
Can’t afford to pay the entire balance on your cards? With the debt avalanche method, you pay down the card with the highest interest rate first, then move on to the next highest. This may end up helping you save interest over time.
Return or resell items you don’t need
Do you really need that third Instant Pot? Did you upgrade a few too many gadgets? If you’ve accumulated some unnecessary gifts or updated some older stuff, consider returning or reselling items that you could do without.
Maybe you could have a yard sale or could sell some of your things in an online marketplace. If you’re not sure which items you want to sell, wait a few months and if you still haven’t used certain items, it’s time to sell them.
Search for additional income
One obvious way to decrease debt is to increase income. Try looking for overtime opportunities at work or pick up a side job. Every little bit can help you eliminate holiday debt if you direct that extra cash toward paying down your credit card bills.
Eliminate unnecessary spending
You might be surprised by how much you can save just by cutting out small expenses. If you subscribe to any online services, think about going without them for a couple months. Instead of buying coffee, make your own. Do you have a gym membership you don’t use often enough? Consider replacing it with a home workout regimen. Even the smallest things add up and can help put a dent in your holiday debt.
Plus, cutting expenses now can help you be that much more prepared for this year’s holiday spending, and avoid holiday debt next January.
Get help beyond the holidays
Working to eliminate holiday debt is a great first step toward getting a handle on your finances. And learning how to deal with the rest of your debt, money, and planning for your future doesn’t need to be hard. To that end, we’ve developed a simple to follow guide to help you find the tools you need to move to a better financial future. Get started by downloading our free guide right now.