Paying off Holiday Debt

Oh my, perhaps, you just realized that you went a little overboard with purchasing gifts for the holiday and now you are stuck with paying off holiday debt. 

Strategies to Reduce Debt and Spending

To begin with, take a look at your credit card statements or other bills and write down what you owe. Include the interest rate and what the required minimum payment is. At least pay the minimum amount for each card. However, choose to pay off the card with the highest interest rate first. Once that card is paid off, use that amount that was being paid toward the next credit card with the next highest interest rate and so forth. 

Another strategy to reduce spending and pay off holiday debt, is to keep a spending diary for at least a week, if not a month. Write down everything you spend money on, even if it is just one dollar, write it down. Spending trends will become apparent when you review your spending diary and analyze where your money is going. Identifying these amounts will provide potential areas to save instead of spending. While at the same time, remember to restrict any frivolous post-holiday shopping.

Use that same spending diary to know where your money is going in order to make changes. Create a spending plan which is your plan on how you spend your money. 

Scrutinize your spending diary in order to find some ways to cut expenses and free up some money in order to pay for these holiday purchases. Are there streaming services to temporarily halt in order to help eliminate the holiday debt? Can you make coffee at home instead of stopping at a coffee shop? 

Another useful tool is PowerPay from Utah State University Extension. PowerPay provides a calculator that helps create a debt payoff plan that works for you. This tool is a personalized, self-directed debt elimination plan and the best part is it is free. 

Set Financial Goals

Finally, start planning now for next year’s holidays. Consider creating a holiday savings account so you can be debt free next year. Set a goal and make a plan by deciding upon an amount that you will most likely spend on holiday purchases. Next, divide that number by 12 months. Then save that much money every month in a separate account. It will be available to you to spend in December the following year. 

I hope you can start your holiday shopping early and stick to your budget for the upcoming holidays this year.