Did you go overboard with holiday spending this year? If you are now carrying too much credit card debt, here are ways to dig yourself out:
- Add up seasonal costs. Calculate the exact amount of holiday-related debt to determine the target number for your repayment plan. This will also help you establish a budget for next year’s holiday season spending.
- Pay off higher-interest debt first. List all your debt by interest rate. Make minimum payments on the lower interest debt and put as much extra money as you can onto the balance with the highest interest rate. Reducing the amount of interest you pay will decrease your total debt more quickly.
- Rework your budget. Determine where you can cut costs and divert more money into debt repayment. Small cuts to discretionary spending (such as making coffee at home) will make a big difference over time.
- Look for extra income. Consider ways to make extra cash. Yard work, handyman or odd jobs, or babysitting could help you pay off debt faster. If you craft or have a creative hobby, consider taking commissions or setting up an online store.
- Shop smart. Access discount programs at the stores you shop at the most. Purchase items you are most likely to need when on sale and buy in bulk if possible. In addition, consider buying holiday cards or decorations on clearance after the holidays.
- Live within your means. Reaching for a credit card when you want something may leave you in a perpetual cycle of debt. Focus on creating a budget that allows for both saving and discretionary spending.
- Start a savings fund. If you want to avoid being in the same position next year, try creating a separate savings account specifically for holiday expenses. Small deposits here and there could make a big difference when next year’s holiday bills come due.