In terms of debt reduction, people must be able to differentiate the two main topics that revolve on this discussion. First is its preventive component and second is its curative component. Both of these components are related and important to discuss. Nevertheless, some people are more in need to study and engage in the curative component of post-holiday debt reduction due to the capability of debts to grow if not addressed and paid right away. Nevertheless, the significance of the preventive component can be easily seen when people consider its capability to eradicate the problem completely in the long run.
In terms of the curative component, the person must be able to utilize a combination of right attitude and specific strategies to be able to solve his or her problem in debts after the holidays. People will appreciate this the most when credit card bills and loan notices are pouring in to your mailbox and you are stacked watching them to pile up. The first thing that a person must do is to have a clear picture of the situation. Before a person must act, he or she must first know what hole he or she is in. On this note, the person must compile and sum up the amount of his or her debts, ranging from credit card bills, bank loans, personal loans, and other financial obligations. After compiling this information and having the general picture of your debt situation, these debts must be arranged in terms of priority. In a nutshell, this arrangement is related to the urgency and the size of the interest of the loans. Believe it or not, some loans are more urgent than other loans. In a situation that you have a very limited capacity to pay all your debts, you need to learn to prioritize; paying the more urgent and costly loans (i.e. in terms of interest rates) first before the other loans that can wait.
After having the general picture of your debt situation and setting priorities, the person must be able to create a plan on how to pay the debts. The most basic way is to allot a specific percentage of your income for paying loans. This is a simple yet very difficult for some people. The specific percentage must be high enough for you to be able to pay the debts in a given time frame. This is very difficult since this requires consistency and discipline to live with how much money is left after paying debts. Often times, sacrifices must be made. In case your disposable income is not enough to cover your debts, you need to cut the money allotted to some expenses. This is different for each individual; you are the best source of information on what expenses that you must limit. For most people, this can be the money allotted for new gadgets, cellphone credit expenses, and restaurant meals.
If you are able to be consistent and well-disciplined enough, you can be sure that you can pay the debts that you made during the past holidays. Nevertheless, people must realize that these efforts will be put in vain if the same trend of spending and paying debts will happen year after year. It is possible for people to have a wonderful holiday season without burying their selves to a mountain of debt. On this note, the preventive component of debt reduction will be discussed.
In a nutshell, the preventive component is more of an attitude than a set of certain tips and tricks. People must be able to acknowledge that November and December are expense-magnet months. In other words, expenses are automatic and hard to control during these times as shops and advertisements are found everywhere. For many people, they spend the most during these times combined to the expenses that they made in six non-holiday months combined. From here, the approach is simple, people must prepare for the expenses that they anticipate for the holiday. If you think that you will spend $1000 for the gifts and other related expenses for the season, save $100 for each month starting from January to October. In this way, you are able to cover your expenses using your hard cash that is not subjected to interests of bank and credit companies.
People must also learn that gifts (i.e. the number one expenses of people during the holiday season, either gift for others or gift for their selves) are not limited to expensive gadgets or things. There are other means for you to give a gift without the three-digit price tag. There are other gifts such as home-made pastries, hand crafted garments, and even a good conversation in a coffee shop. As people realize this, expenses during holiday seasons can be cut dramatically.
Saving and planning your financial means and obligation is not boring. It is better to shop and pay for things if you know where you will get the money that you will use to pay them. Instead of a month of adrenaline rush of shopping and consuming, along with 10-11 months of pounding hundreds or thousands of dollars for payment, it is better to have 10-11 months of saving and one full month of shopping and consuming. Post holidays can be easy and fun if you know how to control your finances.