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How to pay off holiday debt

Submitted by strandslucia on Fri, 01/21/2011 - 18:55
Debt Managmeent //

I’ll admit, as much as I preach about spending less than you earn and planning your holiday budget in advanced, the holidays always seem to get me. So as the end of the month approaches and all my holiday bills begin coming in, I’ll be devising the best plan to pay it off.

While my holiday debt is manageable, it’s still important to me to find the best and fastest way to pay it off. If you’re facing the same problem, here are some tips to help you pay off that holiday debt a little quicker:

Find ways to cut back on expenses
Having debt means you may have to make some sacrifices when it comes to your discretionary spending. This can mean packing a lunch instead of going out to eat, turning down the heat to save on gas or cancelling your Netflix for a couple months. Depending on the size of your debt, you may be able to find enough extra cash in your budget to pay off your debt before Spring comes!

Don’t add more debt
You’ll never pay down your debt if you keep adding to it, so find the willpower to buy only the things you need while you’re trying to slash your holiday debt. This can mean resisting the urge to buy those boots you’ve been wanting that are now on clearance or canceling that weekend ski trip you had planned. Prioritize your needs and save the wants for later.

Make more than the minimum payment
You will significantly increase the time it takes to pay off your debt, as well as your total balance, if you only make the minimum payment. This is why it’s so important to pay more than minimums. If you have the money to spare, put it towards your credit card debt.

Pay high interest cards first
If you’ve accumulated debt on multiple cards and you can’t pay everything down at once, be sure to pay down cards with the highest interest rate first. You want to make the minimum payment on all cards, but put any extra money towards cards with high interest rates.

Get a lower interest rate
Check the interest rate on your credit card(s). Depending on your credit score and the type of credit card, anything above 19 percent is too much. Call your credit card company and find out if you can get your interest rate lowered. Trent over at the Simple Dollar as an excellent guide to help you get your interest rate reduced.

Track your progress
As with any goal you set, its important to track your progress. Set aside 30 minutes each week to review your finances in moneyStrands or whichever tool you use, and make sure you’re on track with your budget. Know how much money you have left to put towards your credit cards each month and you’ll be able to shed that holiday debt in no time.

Extra financial help
If you need a extra help or motivation getting out of debt and getting your finances in order, check out the SmartCookies. They have a great coaching program designed to assist you in achieving all your financial goals.

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