After the holidays, many find themselves in debt from over-spending. Reducing post-holiday debt takes motivation, planning and perseverance. What are some strategies to manage the post-holiday debt mess to consistently reduce or even pay off total debt? Here are some suggestions to help you reduce your post-holiday debt.
-Get familiar with your money. How much comes monthly? How much goes out? What is your total credit card debt? How much do you pay monthly toward credit cards?
Take a piece of paper and draw a vertical line down the middle. On the left side, list all money coming in for the month. Use net figures from paychecks, child support, and any other wages you earn. Include all incoming funds to your checking account throughout the month.
On the right side of the paper, list all monthly expenses. First, include necessities, like rent/mortgage, food costs, electricity, water/sewer, auto insurance, and the like. Total these items to learn the amount it takes you to cover living expenses for the month.
Next, skip a few lines and list your “spending debt.” Spending debt refers to amounts you owe on credit cards. This list is most likely your post-holiday debt. Total your credit card debt.
Then, list monthly amounts you pay to each credit card and total them. Know these amounts intimately because knowledge is power. And that power will motivate you to reduce post-holiday debt.
-Recognize having credit card debt means you are giving away hard-earned money each month.
The vast majority of people who carry credit card debt from month to month are most likely paying just the minimum payments on credit cards. The frustrating fact here is that you are giving away free money each month to credit card companies to pay monthly fees and finance charges those companies add in to what you owe monthly.
-Decide to stop spending money frivolously and to do so only for items needed to live, like groceries and gas for the car.
Promise yourself you will not spend money unless it is for necessity. You won’t go shopping for new clothes and shoes. You will avoid buying expensive coffee drinks every day. Instead of giving to charity, give to your credit card accounts to reduce post-holiday debt, at least for now.
-If you have items you don’t want or need, have a garage sale. If you only have a few larger items to get rid of, advertise them in the local newspaper and/or Craigslist to make a few bucks. Then, apply those dollars toward paying down your post-holiday debt.
-Take on a part time job. Utilize skills you have to make money. Offer to wash your neighbor’s cars or take a part-time position a few evenings a week at your uncle’s restaurant. If you can sew, do mending for friends, family and co-workers. Baby-sit. Then, use all the money you earned from the part-time job to pay off your credit cards. You will be surprised at how quickly you can reduce post-holiday debt.
-Set financial goals and make them happen.
Vow to do everything possible to—one by one—pay off credit cards to stop paying those mounting extra credit card fees. Remind yourself you are getting nothing for money you pay toward monthly charges. Set a goal to pay off some (if not all) of your credit card accounts to reduce post-holiday debt.
-Carry only one credit card in your wallet and designate it for emergencies only.
Select one credit card to carry from now on to use only for necessities. Place a sticky note on the card that says, “Do I really need what I am about to buy?” and place it back in your wallet.
Pledge not to use the rest of the credit cards, at least for awhile until your post-holiday debt is drastically decreased. Remove them from your wallet and put them in a safe place at home.
-Work toward paying off credit cards one by one by paying as much money as possible to the credit card with the lowest balance. Paying off one card means you will put an end to paying monthly finance charges and fees on that card, thus freeing up more money to pay toward other credit cards and reducing post-holiday debt.
Remind yourself you can get rid of those excess charges you are paying monthly. Visualize throwing your money in the garbage—because that is the same as paying finance fees to the credit card companies month after month. For now, continue paying at least the minimum payments on all credit cards (more is better), except for the one with the lowest amount owed. On that card—the “focus card”—you will pay as much as you possibly can each month. Any extra money you earn or have each week/month is to be applied toward the focus card’s balance to pay down your post-holiday debt.
Then, when you pay off a credit card, move on to the credit card with the next lowest balance. Now, it is your focus card. Continue in this manner until all cards are paid off or until you get to the last credit card. This one, although it has the largest balance, will be the easiest one to pay off as you now have access to all the monthly money that used to go toward other credit card balances to apply to this credit card’s balance and eventually end your post-holiday debt.
-Recognize when you need professional budgeting advice and call a consumer credit counseling agency to help reduce post-holiday debt.
Although reducing your post-holiday debt is not easy, it can be done. Learn to stay familiar with monthly income amounts and amounts spent for necessities and credit card bills monthly. Use the above strategies to put extra effort in to pay down and eventually end your post-holiday debt.