Now that the holidays have come to an end, are you experiencing a “holiday debt hangover”? Maybe you were overly generous with gift-giving this year, or perhaps you got carried away with celebrating the season and indulged a little more than your checking account could handle.
The new year is upon us, and that means last month’s credit card bills will soon be piling up. You might be feeling majorly stressed, anxious, or even ashamed when you’re faced with how much you put on plastic during the holidays. However, you shouldn’t despair. Instead, take charge of your holiday debt and develop a plan to tackle it responsibly by following these five simple tips.
1. Don’t Procrastinate
Don’t wait around to deal with holiday debt. The sooner you come up with a repayment plan, the better.
First, you need to figure out just how much you owe. Take a look at all of your bills in order to get an accurate picture of your debt. Do this now, not later. The longer you wait, the more you’ll end up paying in interest and fees.
Prioritize what’s important. Your regular monthly living expenses-including housing, car payments, etc.-should be at the top of your spending list. Then, the 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 can end up saving you more in interest over time.
3. Return or Resell Items You Don’t Need
Do you really need that third Instant Pot? If you’ve accumulated some unnecessary gifts, or if you’ve updated some older stuff, consider returning or reselling items that you were gifted but can’t (or don’t want to) use.
You might have a yard sale, or you can sell some of your things at 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 them, it’s time to sell them.
4. Search Out Additional Income
One obvious way to decrease debt is to increase income. Try looking for overtime opportunities at work, or pick up a gig job on the side. Direct any extra cash you earn toward paying down your holiday debt.
5. Eliminate Unnecessary Spending
You might be surprised how much you can save right now just by cutting out small expenses. If you subscribe to any online services, think about doing without for a couple months. Instead of buying coffee, make your own. Got a gym membership you don’t use often enough? Come up with a home workout regimen. Even the smallest things together add up, and you can put any savings you earn toward eliminating your holiday debt.
If you start saving now, you’ll be that much better prepared for this year’s holiday spending. That way, you can avoid stressing about holiday debt come next January.