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Don’t Let Holiday Debt Get You Down: How to Get Back on Track

Debt after the holidays

The holidays aren’t exactly known for being a time for belt-tightening or careful consumption. Instead, people tend to go overboard during the month of December: eating too much, drinking too much, and spending too much. If taking a peek at your credit card statements on January 1 left you feeling ill, know that there are ways to beat the holiday debt without too much pain. Develop a plan to bring down your debt and get back on track financially, so that you can enjoy a prosperous new year.

Assess the Damage

Before you can begin to tackle your holiday debt, you need to have a fair idea of how much it is. Look at your credit card statements for the month and add up the amount that was related to holiday spending. Knowing how much you spent this past holiday season will not only help you come up with a way to pay it off, it will also help you plan for next year.

Develop a Plan to Pay it Off

Depending on the size of your debt, you might be able to pay it off in one fell swoop. If that’s not the case, you’ll want to figure out a payment method that does the least amount of damage to your finances. One option is to try to transfer the balance from a high-interest credit card to one that has a low interest rate or to one that is offering a rate of zero percent. That way, you can make monthly payments on the amount without paying an excessive amount of interest. Take a minute to read over the fine print before transferring, though, so that you know how long the introductory rate lasts and so that you don’t end up paying excessive fees for the transfer.

Another option, if you don’t have a credit card with a low rate or don’t qualify for a new card with a special introductory rate, is to try a debt management program. A debt management program lets you work with CESI and your creditors to come up with a payment plan that fits your budget and helps you effectively pay down your debt.

Adjust Your Budget

If holiday spending threw your budget off-course, you might want to adjust it for at least a few months so that you can focus on bringing down your debt. Consider trimming any non essentials from your monthly budget, and put the money that you would have spent on them towards your debt. It might mean missing out on an after-work happy hour or on family pizza night for a few weeks or months, but once your holiday debt is paid off, you can add those activities back to your budget.

Start Planning for Next Year Now

Learning from past mistakes helps you plan for the future. If you don’t want to end up in debt after the holidays again next year, the time to start planning is now. Take a look at how much you spent this past season—the expected average amount spent was $861 for 2014, according to the American Research Group—and use that amount as a guide to figuring out how much you should set aside each week or month so that you have enough next year. If you set aside $15 per week for the next 50 weeks, for example, you’ll have $750 saved by the end of the year.

The debt remaining after the holidays can bring your spirits down. But with careful planning, you’ll have it paid off quickly.

If you are experiencing financial difficulty and are looking for a solution, non-profit credit counseling can help you make sense of all your options. Contact us today for a free financial assessment with one of our certified credit counselors.

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