These days, the holidays are more commercial than ever. While there are plenty of ways to save money on gifts, the expectation of buying those gifts for basically everyone on your list is ever-growing – and that can lead to some serious spending during the holidays.
It probably isn’t a surprise that paying off holiday debt is something that more and more people are concerned with every year. Especially in recent years – during the Covid-19 pandemic and the resulting economic downturn – people are more worried about debt than ever before.
If you are wondering how to pay off holiday debt, check out these tips – starting with avoiding debt altogether when possible.
Still in the process of spending for the holidays? Now is the time to take a few steps to ensure that you come out on the other side with as little debt as possible.
Before you start purchasing gifts – or finish, if you have already started – take note of who is on your list. Are there people you could simply send a card to instead? What kind of budget are you looking at? Are there ways to save money on the items you intend to buy? There are all important questions to ask yourself before you finish that gift list!
When checking off the names on your list, you might be tempted to reach for your credit card for every single one. After all, it’s the holidays! However, the resulting debt could stick with you long after the decorations have come down.
The best choice is to reach for your credit card or other loans only when it is wise to do so. If you are planning for a major purchase and know that you will be able to pay it off after the holidays, go for it. If you have the money to pay off your balance immediately and are looking for a good way to boost your credit score, that is another great way to use credit during the holidays.
However, there are plenty of ways to get yourself in trouble at the end of the year in terms of spending, and misusing credit is chief among them. Opt to pay outright for gifts whenever you can.
Do you have reward points accrued through your credit card? Did you rack up shopping rewards through your favorite retailers this year? What about cash back or points you earned for specific purchases? These are all great ways to help offset the cost of the holidays.
Maybe you didn’t have the time or ability to steps to prevent holiday debt. You aren’t alone. According to the New York Post, over a quarter of all Americans go into debt each year during the holidays.
As such, you very well might be dealing with debt once the celebration is over. What does that mean for your family? With these smart steps, it doesn’t have to mean financial stress.
Here are a few tips for how to pay off holiday debt as quickly as possible:
Before you can begin paying off any amount of debt, you need to examine your finances. If you do not already have a budget created for the coming year, make one. This will help you manage those payments you will need to make and determine where debt repayment fits within your overall financial outlook.
Next, make repayment of debt your top priority. If there are other expenses that can be removed or reduced within your budget, do so. This may involve less of life’s everyday luxuries for a short time – such as dining out, etc. – but you will see that by tightening your belt in these places, you can make larger payments and reduce your debt quicker and more effectively.
How will you pay down your debt? That might sound like a silly question, but there are many ways to approach the repayment of debt. From the snowball or snowflake methods to the avalanche method, you can find plenty of information about the various methods online. Each has its pros and cons, so research carefully before choosing an approach.
Another smart way to manage your debt – if you have the credit – is to move your outstanding balances to one, single account. Opening a line of credit with a low rate of interest will reduce the overall amount you have to pay. It will also make those payments easier to manage, since everything will be done through one lender.
Once you have a plan in place to pay off your holiday debt, stick to it. It can be very tempting to deviate from this plan or to accrue more debt, especially once you begin to see progress. However, doing so can cause you to backslide, a frustrating scenario when you have worked so hard for so long to pay it off.
Avoid this by keeping yourself focused on the end goal. While it may be frustrating now, it pays to think of how great you’ll feel having all of that debt paid off!
While the aforementioned tips for how to pay off holiday debt are great, there are definitely times when that debt simply isn’t manageable. When this happens, it might be time to talk to an attorney about your options, including bankruptcy and more.
If this is the scenario you are facing, consider consulting with the experienced and knowledgeable team at the Van Horn Law Group. We aren’t here to pass judgment. We are here to help you decide what to do and which steps will lead you in the right direction to resolve your debt. Give us a call today to learn more about your options and to get the guidance you need!
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