You may try hard, but you can't help racking up credit card debt over the holidays. It’s just unavoidable. Therefore, you should put in place a solid plan to shed off that debt as early as possible. According to a survey conducted by the American Research Group, Americans are expected to spend $646 on average for gifts in this holiday season. Often, some people utilize their cards to the fullest on holidays and just ignore their budgets. If you don’t want to let holiday hangover ruin your new year, read the five simple ways mentioned below to combat your holiday debt load and enjoy a less hectic year ahead.
1) Tally up the whole: Make a master list of the debts you accrued over the holiday season. Tally up your credit card statements to get an exact figure that you owe for spending on gifts, decorations, food, entertainment and other expenses. If you’ve received any gift, see whether or not you have to pay taxes on that. If you get a realistic figure regarding what you owe, then it can help you set some goals to pay those off.
2) Prepare a realistic payoff plan: Assess your current household budget and see how much amount you can take out from there to pay toward your holiday debts. If possible, prepare another household budget and cut expenses on areas like entertainment in order to maximize the cash flow. Make use of this extra cash toward your holiday debts. However, remember that you need to make more than the minimum monthly payments toward your credit card debts to pay them off fast. Only making the minimum monthly payments won’t make any difference. Try to trim down unnecessary expenses to accumulate more funds.
3) Consolidate the debts: Take advantage of 0% balance transfer credit cards and other promotional rates in order to reduce the total interest payments on your debt. If you are convinced that you won’t be able to payoff the total amount of holiday debt incurred within the next two or three months, transfer your credit cards balances to a zero interest credit card and then pay it by the next six to twelve months (within the introductory 0% balance).
4) Tap into another income stream: If you’re really willing to pay off your holiday debts ASAP, try to find out some other sources of income. You could easily take on a part-time job on weekends or turn a hobby into a side business. Be innovative and create some new ways to generate some extra cash. Selling household goods that you are not using or has slightly used can help you generate some quick cash so that you can shed off your holiday debts fast.
5) Make use of bonus cash: If you have received some holiday bonus checks or you have filed your taxes in advance and got some refund, use that money to say goodbye to your holiday debts. Though it may be tempting to use the bonus checks and tax refunds toward savings or purchasing expensive goods, you should stick to your debt relief venture so that you can become a debt free entity before next holidays. If you can take care of your debt sooner, you may be able to live a peaceful life throughout the year.