It seems to happen every year – the holidays cause you to go into debt. You most likely charged up your credit cards again and maybe missed a bill or two to afford gifts, food for parties, a tree and decorations. Most credit cards are high interest which means your debt is building up and you’re paying late payments on past due bills. The best thing you can do now that you’ve gone into debt for the holiday season is to get back in control of your finances immediately. The sooner you can pay off the holiday debt, the sooner you can get back on track and avoid making the same mistake next year. Here is what you should do if you’ve gone into debt for the holidays.
Stop Spending
Most importantly, right now is the time to stop using your credit cards. Not only should you stop using credit cards, but cut back on your typical expenses for a while. Get your hair cut less often, skip the manicures or massages, starting bringing your coffee to work from home and start packing a lunch. This is an important time to cut back on any luxuries until your holiday debt is paid off.
Extra Income
Do you get a bonus every year? Do you get gift money from a relative every Christmas? Any extra money you typically get or get unexpectedly should go straight to the holiday debt fund. If you get rewards on your credit cards, now is the time to cash those in and put the extra money towards your debt.
Make More Money
Once you’ve lowered spending and put extra cash towards your debt, you now might want to take it one step further and starting making more money. Take on extra hours at work or pick up a part-time job on the weekend. Remember that this is only a temporary measure to take care of the holiday debt you have now while next year you can prepare better to avoid repeating this process.
Another option is to sell extra clothes or items around your house. Do you have summer clothes that you don’t want any more? Consider selling old clothes to consignment shops . These days you can even do this from home with online consignment shops. You can also search the house for items you hardly use and sell those as well. All of that extra money can go towards paying off the debt. It will also make room in your home for your new gifts and it always feels great to purge the old and bring in the new.
Did you get gifts or gift cards that you really don’t care for? You may want to return items for cash or sell unwanted gift cards at an online marketplace.
Refinance
This is a really great time to look at all of your debt. If you’re struggling to pay off your old debts and have new holiday debt to worry about, it might be time to look into a debt consolidation loan. Debt consolidation loans are designed to take all of your existing debts and combine them into one, simplified loan. You’ll pay one lower monthly payment to the debt consolidation loan which will save you money. This is a great way to organize your finances and make debt repayment more manageable.
Paying off holiday debt doesn’t have to be hard to do. Use the above tips for a starting point and maybe see these other tips from BankRate. Either way, take care of it sooner than later so that you aren’t worrying about it next year when the holidays return again.
