Post Holiday Debt Reduction Strategies

It seems that after the holidays, many people take one look at the bills they racked up and want to faint. Between the costs of holiday gifts, travel, and even eating out more due to not having time to cook, these bills can be overwhelming. Therefore, it is important as the new year begins to figure out ways to reduce the debt that comes from over-indulging through the holidays. Adopting strategies that will help you to reduce that post holiday debt will give you a sense of being in control of your finances and your life again. Here is how you can reduce that debt and take back control of your life.

The first thing that you must do is to take a long hard look at how much debt you actually have. This can be eye-opening, and even a little bit embarrassing when you find out how much money you have actually spent through the holidays. However, if you don’t look closely at how much debt you actually have, trying to make a plan as to how to pay it off may be a lesson in futility. When you know how much debt you actually have, look at your income level in relation to that debt.

When you have these two things in place, it is time to make a plan. Make sure that the plan makes sense for you. If it doesn’t, it will not work. Decide what sacrifices you can realistically make that will give you more money to pay off your debt. You may sacrifice your morning latte, or one dinner out a month until you have your debts paid off. If there are any items that can be paid off immediately, pay those off first. Otherwise, pay off the items with the highest interest rates first. This will save you more money in the long run. Pay minimum payments on the rest until you get each one paid off, then move to the next highest interest rate or balance. It is better to make minimum payments on the things that have lower balances because they will be paid off sooner anyway.

As you pay each item off, celebrate a little bit. This is not to say to run up the credit card bill again. Something small is celebration enough. It can be as simple and cheap as a bubble bath, but make sure that you feel rewarded. This is an important part of paying off debt, because it often happens that when someone feels like all their income is going toward paying off debt, they start to resent it, and rack up the debt again.

The most important part of all is to make a plan so that you do not wind up in the same mess the following year. Set a budget for holiday gifts and festivities, and do not go above that budget. That way, when the next new year rolls around, you can be relaxing while everyone else is scurrying to get out of their own holiday debt.