debt management

After the last present has been open and the bows and ribbons cast away, comes the pledges to live a better year. But if like many other people in the U.S. you accrued a mound of debt over the holiday season, maintaining that resolution may seem impossible. Surmounting credit card bills, high interest rates, and not properly budgeting can lead to a very stressful, very financially unhealthy year. Committing to paying off debt is as good a resolution as any; make sure you follow the necessary steps to achieve a healthier financial future.

Expenses & Cutbacks

Once the holidays are over, it’s time to sit down and gauge your financial situation. By calculating all your monthly expenses, you can decide how much you can afford to put toward credit card debt and where to reduce spending elsewhere. This can include eliminating a streaming service, taking a homemade lunch to work, walking to the store instead of driving, making your own coffee at home instead of buying out, or any other area you find you can eliminate spending. Most importantly, unless it’s a necessary expense, don’t put any new purchases on your credit cards.

Frugal Fun
While recreational activities are necessary for maintaining mental and physical health, look for experiences you can enjoy that won’t cost you any money, such as hiking, ice skating, or visiting a library. Instead of eating out or getting takeout from your favorite restaurant, find a tasty-looking meal online and learn how to cook it at home. You can still have fun without breaking the bank, and you’ll have peace of mind knowing your savings are going toward greater financial freedom.

Paying it Back

Once you’ve taken a look at all your debt, you can decide how you want to pay it off. Applying the “debt avalanche” technique of repayment can help you minimize the impact of your interest rates and reduce the number of loans you’re paying on. What is a debt avalanche? You begin by paying a little more each month on the credit card with the highest interest rate. Once that’s paid off, you put the money you were paying toward that loan, in addition to payments already being made, on the next highest interest rate loan—and so on. Another way to get started on repayment is to pay down the card with the least amount, thus reducing the number of cards you’re paying on quickly. Whatever payment plan you decide, stick with it and rest assured that slow and steady is actually an efficient and fast way to pay off debt.

Additional Cash Avenues

Did you get something for Christmas that just isn’t you? If possible, return the items and use the money you get back to put toward your holiday debt. With tax season around the corner, setting returns, as well as any holiday bonuses received, toward repayment will help you stay on top of your debt.

Be Proactive

In the coming year, make a plan so that holiday debt doesn’t become an annual crisis. Start saving early by putting money away throughout each month for a holiday fund. With a nest egg put aside, purchasing gifts during the next big shopping season won’t seem like such a daunting and expensive task. Another way to stay ahead of the curve is to buy items as you see them during the year so you’re not spending all at once. It’s also a good idea to plan for those pricier items and take advantage of holiday sales that arise throughout the year.

Debt Management Program

Finally, if your struggle with debt seems insurmountable, you should also consider a debt management program. Credit counseling organizations will work with you and your credit card companies to consolidate your debt, lower your interest rate, and create a monthly payment that is affordable and customized to your specific situation.

By making a plan and following these tips, you can enjoy the afterglow of the holiday without fearing for your financial future.


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