Financial Tip of the Week - Paying Off Holiday Debt
Source: Military Community and Family Policy (MC&FP) Weekly eNewsletter
We do a lot of overindulging during the holidays. We take an extra day off work, eat an extra piece (or two) of pie, and sometimes charge more than we can afford on our credit cards. With the holidays at an end, and post-holiday credit card bills rolling in, it's time to create a plan to pay off any debt we may have incurred during the holidays.
- Cut back on spending. The first step in getting out of debt is to stop borrowing. If you overspent during the holidays you need to cut back your post-holiday spending. It may help to cut up your credit cards or lock them away in a safe place.
- Make a budget. Cut out any expenses you can and plan to pay off your debt as quickly as possible. While you are making a budget, figure out the most you can afford to pay each month to reduce your debts, then make those payments without fail.
- Create a payment plan. If you have debts on more than one credit card, either pay off the card with the highest interest rate first and work your way down to the card with the lowest rate, or pay off the smallest loan first and work your way up to the largest.
- Once you've paid off your debts. Don't give in to the temptation to start over-spending again. Instead, take the money you were paying each month on your debts and begin to save it. Better yet, save it automatically. That will give you a financial cushion the next time an emergency strikes.
- Plan for next holiday season. Start saving now to avoid debt next holiday season. Take a look at what you spent the last few months, on gifts, travel, food, and other holiday related items. Divide that amount by 12 and put that much away in a savings account.
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