Dealing with Holiday Debt

Repaying Holiday Debt

Repaying Holiday Debt

Many people get caught up in the fun of going on holiday and find themselves spending more than they expected.  Unfortunately, long after the holiday sun-tan has faded or the egg-nog has been drunk, the debt remains.  Because this type of debt can be unexpected and unplanned, many consumers struggle to pay it off in a timely fashion and it snowballs into a serious problem.  A lot of the time holiday debt is also placed on credit cards, so has a substantial interest rate and penalties attached to it.

According to to a recent survey by creditcards.com, almost 20% of Americans believe that they will never get out of debt.  That is an alarming figure and points to the fact that debt can quickly grow to alarming levels, that are difficult to escape.  Despite the fact that many consumers feel they have inescapable levels of debt, in most cases it is possible to repay your debts and live a financially successful life.

Here are some tips to help pay down your unexpected holiday debts, cleverly and quickly:

1.  Identify your debt and create a repayment plan

Take a look at your credit card, store card and cash spending over the holidays.  Firstly assess how much extra debt you took on over the holiday, then think about which debts need to be paid off first.  Typically, those will be the debts with the highest interest rates and late payment penalties.

Some store cards may have 24 months interest free, so they are safe to pay down slowly.  Just make sure you continue to pay them down, because many of those store cards have horrendous late payment fees.

2. Stop adding more debt

Since you have just taken a substantial hit to your credit cards from holiday spending, slow or stop further spending.  The last thing you need to do is continue wracking up debt while you haven’t paid down the holiday purchases.

3. Sell christmas presents

If the debt is from the christmas period, there are chances that you have unwanted presents.  You can easily sell unwanted presents on Ebay or Craigslist, for cold hard cash.  If you have been given giftcards, you can also sell those online.  Take a look around your room for other items you might want to list — you could be sitting on hundreds or thousands of dollars worth of possessions that you no longer need.

4. Juggle your debt

Take a look at the terms and conditions for your debt.  You might be able to save money by using one source of debt to pay off another.  For example, if you have a store card that is wracking up 17% interest, consider paying it off with a credit card that has an interest free period, or with your mortgage equity account.

5.  Persistently pay off the debt and don’t get depressed

Continue to pay down the debt every week.  Regardless of how much you are paying, it is crucial that you continue to make positive progress towards paying down these unexpected debts.  You must concentrate on continually going forward and improving your situation.

6. Tighten up the leaks in the budget

There are usually improvements available in most people’s budgets.  Look for temporary savings and for luxuries that you can easily sacrifice.  Cancel magazine or satellite television subscriptions,  save money on your food budget, take public transport more often, skip those expensive pastries at the delicatessen.  The average person has dozens of ways to save money within their budget.  Do some brainstorming and put the extra money into paying down your holiday debt.

Reward yourself by gradually reintroducing luxuries as you reach debt repayment milestones.  Nothing as satisfying as paying off a credit card and rewarding yourself with a treat!

  • bina

    great work!