Once the holidays are over, many of us will be facing a larger than ever pile of debt, with a decreasing ability to manage it. This looming financial stress can make even the happiest of holidays tense and anxious. How can we manage this stress? Here are some tips:
- Draft a budget, and stick to it. Retailers are masters at making you want something they are selling, no matter the cost. And while the newest and most high-end flat-screen TV would be nice, if you have $500 to spend on gifts, you must spend $500 or less. Going over budget will seriously impact your ability to repay your debts down the road.
- Plan your debt repayment strategy now. $1,000 in credit card charges will raise your minimum payments by only $40 or so, but at that minimum payment you will still be paying on almost the entire $1,000 next Christmas. So put yourself on a plan to repay those charges in full as soon as you can, and no later than by next holiday season. If you can’t pay it back by then, you should probably reconsider your budget, setting it at a level you can afford to repay more quickly.
- Use only cash. It may be difficult, but the best strategy is to not incur debt at all. If that means a holiday season of less plenty, your bank account will thank you all next year.
- Don’t use more debt to pay debt. If you have reached the stage where you use balance transfers to manage your payments, or living on your credit cards while your income goes to pay those cards down, it is time to speak to a professional for help. An attorney can help you explore a number of options, and set you on the path best for you.
- Start saving for next year January 1. If you set aside money for gifts during the year, it is easier to stick to a budget on those purchases, and you get the benefit of making interest, not paying it.
