Did you know that in 2017 Americans spent more than $690 billion dollars during the holiday season? What’s even more alarming is the fact that less than 50 percent of these people were able to pay off their credit card debts a month after that. Up to 25 percent will take another six months or even more to complete paying off their holiday expenses. This adds a whipping $1,000 debts to their budgets.
Once the holiday fever wears off, that’s when people realize that all the merrymaking is not worth the headache that they get afterwards.
If you have the same problem, and you’re still deep in debt due to the past holiday, here are some ways that can help get you out of trouble fast:
# 1 – Negotiate for lower interest rates
We all know how high credit card interest rates are. And these even grow higher due to late payments. But did you know that there’s a chance that your credit card provider would be willing to give you a break if you ask them to?
Of course, your credit card company would want you to keep using their card so they might be agreeable to a request for a lower interest rate. But in order for the company to agree on a lower interest rate, you would need to commit to a certain deadline. For example, you will need to commit that you will complete paying off the $1,000 debt in five or six months.
# 2 – Plan how to pay off multiple debts or credit card balances
If you have several debts that you are struggling with, what you can do is to list them according to their interest rates. Put the ones with the highest interest rates on top. It is quite common for experts to recommend battling the highest interest card first. But at the same time, you will need to make minimum payments on the other cards. Then you can slowly work your way down.
Another approach is to pay off the debt with the smallest amount. The principle behind this approach is that the smallest debt is the easiest to pay off, and accomplishing this will give you the motivation and confidence you need to pay off your other debts.
# 3 – Trim down your expenses
You can’t pay off your holiday debts if you feel like it’s still the holiday season and that you’re still in splurging mode. Minimize your expenses by avoiding the following:
- Eating out in restaurants
- Going to the movies
- Visiting spas and salons
- Picking up the tab when going out with friends
- Engaging in expensive hobbies
It’s important to realize that you can still have fun even if you do not spend a lot. And please take note that it’s no longer the holiday season, and it’s time to reform your old spending habits.
# 4 – Establish a budget
A budget is and will always be an integral part of any debt payment plan. It’s not possible to resolve your holiday debt without establishing an effective budget. To do this, you need to write down all your expenses in a month, including both fixed and variable expenses.
Then, compute your total amount of income. Allocate your income to go to your different expenses, making sure that there’s enough left for debt payments. If not, consider these two options: cut back on other expenses or earn more money. Be sure to follow your budget consistently.
# 5 – Generate extra income
As mentioned in the previous tip, if you are not able to squeeze in the debt payments in your overly tight budget, what you need to do is to generate more income. You can do this by getting a second job, working extra hours in your current job, or finding a side gig online. You can also try putting up a small business that will be a good passive source of income for you.
Try looking around your home as well to see if there are things that you can sell for a profit. Get rid of those that you no longer use not only to get extra money but also to free up extra space in your cluttered house.
Paying off your holiday debt may be difficult but it’s not impossible with the help of these practical strategies.