Guide to Paying Off Holiday Debt
Now that the holidays are over, it is probably time you opened up your wallet and had an honest conversation with yourself. Did you overspend this holiday season? Do you have it in your budget to get your statement paid off sooner than later? Here is your guide to paying off holiday debt.
If you are like most Americans, January is sort of a holiday debt hangover month. Most families spend on average over $700 for Christmas. This number gets higher when you factor in interest rates (and heaven forbid late payment fees) from your credit card company.
Now you must plan for how you will pay back all the fun things you bought last month. If you are not too sure how you will get it all paid off, this guide will help.
Transfer your balance
Interest rates are a killer to your debts and it seems as though interest rates keep on rising. If your credit cards do not have zero percent interest, then you need to start shopping around. That is, start shopping for zero percent interest cards to transfer your balances to.
Keep in mind, that this only makes sense if you have high-interest rates and balances. Most credit cards charge around 3-5% to transfer your balance. If you do the math and it is less than what you will pay in interest fees, get transferring your balances immediately.
Budget, budget, budget
Taking charge of your debts and finances means getting real with your bank account and budget. Now is the time to stop spending and cut everything you possibly can. Budgeting is a very important aspect of getting out of debt. Find a budgeting method that you can stick with for the long haul. Even if you get to a point where your debt is paid off, sticking to a budget sets you up for future success.
Consider where you can trim your budget as well, even if it is only temporary. You can also shop around for some of your expenses. For instance, if you haven’t shopped around for car insurance for a while, now is the time to see if there are more competitive rates out there.
It’s also not a bad time to go on a diet. Seriously, dieting is a popular resolution for the new year. You can start by cutting out eating out, lower your grocery bill and try to buy less in general. You can see this as killing two birds with one stone!
Pay off the small stuff first
Feeling a sense of accomplishment can really be a motivating factor for getting your debt paid off. Financial experts often suggest tackling some of your smaller debts first to get to success sooner than later. Interest rates will always hinder your progress, so keep a careful watch on what credit cards need your attention most.
Make double payments
Did you know you can make more than one payment a month on your credit card? The truth is, you can make multiple payments usually without penalty. Some people choose to make a payment to their credit card each time they get a paycheck. It is just another way to get your debt lowered faster.
Earn extra cash
In the end, you can always make more money. This means picking up another job or another way to earn that extra dough. There are many options today for earning extra that nearly everyone can do it. Between rideshare, room share, or freelance work, there is something for everyone.
Be sure to check out these sites for further help with ways to earn extra cash: Upwork, Flexjobs, Guru, Catalant, and Toptal. It is also not a bad time to ask for a raise or promotion at your current position. You never know until you ask.
Sell your stuff
Lastly, you can earn extra cash by literally cleaning out your closet. Perhaps you received a Christmas present that you don’t mind returning. Don’t forget about the gift cards too. You can sell back any unused gift cards for cash.
The holidays are always full of cheer, but the party shuts down once you receive your next credit card bill. If you overspent during the holidays, just know that you are not alone. Also, know that there are ways you can dig yourself out of credit card debt. You have the power to not let debt hang over your head all year long.