10 Cures for a Holiday Debt Hangover


Most people use credit cards for holiday purchases, even if they intend to pay them off in the new year. Since Chase is a Certified Personal Finance Counselor and Educator, he has some great advice, and I thought his post about paying off holiday debt could be helpful. A longer version of the post below was originally published here. Check out his company’s blog if you’d like to learn more about budgeting and managing your credit wisely.

The holiday season has to come to an end, and for many consumers the new year brings credit card statements reminding you of purchases you made. If you racked up credit card debt when holiday shopping, we will give you a few tips on how to pay off your credit cards. Setting up a plan can keep holiday credit card debt from going deep into 2013.

1. Get organized – Collect your statements and see how much you owe. In order to set up a plan to pay off debt, it’s important to know exactly how much you need to pay back. Gather your statements or go online and check your balances.

2. Budget time – If you have a budget, take a good look at it and see why you fell into debt. If you don’t have a budget, it’s time establish one that works for you and your family. One thing to try when setting up or adjusting a budget is to track your expenses for an entire month to see where your money goes.

3. Adjust your budget – If you are falling behind every month take a look at your budget and see where you can make cuts, whether it’s the small expenses or a large fixed expense. If you previously did not have a credit card payment or if your payment will increase, add the new payment amount to your budget.

4. Do the math – Look at a credit card debt calculator and find out how long paying off your debt will take and how much you will pay in interest. Understand the benefits of fixed credit card payments, how to calculate APRs and why making minimum payments can lead to years of financial hardships.

5. Set your goals – Establish goals for paying off debt. If your debt is just from the recent holiday season, paying it off could be a short-term goal – maybe in the first quarter of 2013? If your debt has been building up for some time, your goal may be a long-term one.

6. Interest rates – If your interest rates are high, make sure you look into your options to pay back debt. Contact your credit card companies and see if you can have interest rates lowered. Lower interest rates will always save you money and time when paying off debt.

7. Pay extra – This is, of course, easier said than done. If you have extra funds at the end of a month, send an extra payment to your creditors. Sending extra payments can go a long way toward paying off debt early and can save you in finance charges. Every extra payment you send will go directly towards the principal still owed on the account. Paying down the principal will mean less interest paid for every month thereafter.

8. Monitor your progress – It’s important to monitor all of your accounts every month. Making payments is just one part of the equation; you should always open your statements or check your account online. Monitoring accounts allows you to be sure your payments are posting and your interest rates have not increased.

9. Don’t “Rob Peter to Pay Paul”- No matter how desperate you are to pay the bills, don’t: raid your retirement funds, take out a payday loan, or prioritize credit card bills over necessities, such as paying housing costs.

10. Begin planning for next holiday season – One thing about paying off debts and how much we hate it is…we can do something about it! It just takes a little planning. In earlier tips we encouraged you to start a budget and set goals for paying back the debt. We can do the same thing by planning for gifts and setting aside cash for those purchases prior to “Black Friday.”

Regardless if your credit card debt is just a hangover of your holiday shopping and a few hundred dollars or has been building for years to thousands of dollars, paying it off as soon as possible will relieve stress and save you money in the long run. Use our free tools to help you set up a plan and pay off your debts as soon as possible, with the least amount of finance charges. Don’t get discouraged, stick to your plan and become debt free!


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