It’s a familiar refrain. We get caught up in creating a “perfect” holiday season for everyone, and in doing so, we spend more than intended on the “perfect” holiday gifts and the “perfect” holiday meal. Maybe we had to travel to visit family and ran up some significant travel spending debt.
The holidays were wonderful, but now comes the aftermath. Those credit card bills are starting to roll in with bloated balances from an excess of holiday spending. What exactly can a person do to clean up those holiday spending excesses? Here’s your game plan.
[See: 10 Easy Ways to Pay Off Debt.]
Make more than minimum payments. A minimum payment on a credit card does nothing more than delay the problem. Your balance will barely go down at all, and you’ll find yourself facing almost the exact same problem a month later. Paying nothing but minimum payments means that it will take years to pay off that card, plus you’ll end up paying as much or more in interest than you ever spent on the card. That’s a mistake. In fact, it’s a recipe for financial disaster.
The smartest thing you can do is to simply make payments that are bigger than the minimum. You should make the largest payments you can on that credit card debt each month.
Be a little extra frugal, so you can afford those payments. Winter is a great time to buckle down with a little extra frugality.
It’s such an easy season to cook a delicious meal at home. Make a soup in your slow cooker before you go to work, so that you come home to a great aroma and a warm meal that’s ready to eat. It’s a very cheap treat in the winter months.
Instead of going out on the town, spend an evening watching a movie (maybe one you received as a holiday gift) underneath a warm blanket. Instead of shopping, spend a day curled up with a good book or Netflix series.
When you’re at the store, buy some store-brand versions of products instead of the name brands. You’ll usually find that they work just as well as the name brands, and you’ll save some money to boot.
Little steps like those can make a surprising difference. Rather than spending that “found” money, put it toward a larger credit card payment.
[See: What to Do If You’ve Fallen (Way) Behind on Your Credit Card Payments.]
Discreetly sell any unwanted holiday gifts. If you’re halfway into January and you haven’t opened the packaging on a Christmas gift … are you really ever going to open it or use it? Consider discreetly selling the item on Craigslist or eBay and get a return on that item.
Even better, if you have a receipt for the item, return it to the store for a gift card, then use that gift card to buy essentials for yourself. For example, if you return an electronic item to Target with a receipt, you can immediately use that gift card on groceries, thus freeing up some cash you would have spent on groceries to pay down a holiday debt.
Look for credit card balance transfer offers. Many major credit card companies — Chase, Citi, Bank of America and U.S. Bank — offer credit cards that come with a nice perk: You can transfer the balance of another card directly to the new card at a drastically reduced interest rate.
Take advantage of this. Transfer the balance of your current card to a new card at a zero percent interest rate or at least a very low rate. That way, payments you make on that debt will go much further toward eliminating the balance.
Note that balance transfers generally don’t last forever. The lower rate tends to vanish after a while. You’ll want to pay off that transferred balance quickly, so that you’re not bitten by the return of a high interest rate.
[See: 12 Simple Ways to Raise Your Credit Score.]
Plan ahead for next year. Keep yourself from falling into this trap during next year’s holiday season by starting a savings plan now. Put away $20 per week into savings and you’ll have $1,000 waiting for you when the holidays come around. You might also want to consider stowing away some of your unwanted gifts for discreet regifting in the coming year.
Another great strategy to consider is talking to friends and family about cutting back for the holidays in the coming year. Perhaps you can move to drawing names for a gift exchange, abstaining from gifts altogether, making homemade gifts or just giving gifts to children.
All of these strategies work together for one purpose: reducing the impact of the post-holiday credit card bills on your life. Use these tactics together and you’ll find yourself cutting right through the January credit card blues.
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