One of the pitfalls of holiday spending is the fact that, too often, we find ourselves in debt. Even when you have a budget, it’s all too easy to pull out the credit cards and say you’ll go over just a little bit. You think you can handle it, but before you know it, January is here, and the credit card bills are bigger than you thought.
What can you do when you are stuck in this position? How can you pay off your holiday debt as quickly as possible? Here are some strategies for getting rid of holiday debt as quickly as you can:
Look for Low-Interest Deals
One of the first things to do is try to avoid racking up more interest charges. See if you can transfer your balances to cards with lower interest. If you have good credit, chances are that you can access a good 0% APR balance transfer deal.
Even if you can’t get a 0% APR, consider other ways of lowering your interest. If you are a customer in good standing, you might be able to call your credit card issuers and ask for a lower interest rate. This can be one way to reduce your charges and make paying off your debt a little more manageable.
Make a Plan
Once you have done what you can to reduce your interest rate, it’s time to make a plan. How much can you put toward paying down your holiday debt each month? Look for ways to cut your spending or to increase your income. Now that you’ve started a new year, it’s the perfect time to re-evaluate the way you have been spending your money. Cut out the unimportant spending, and focus paying down your holiday debt.
The best way to pay off your debts is to tackle the loan with the highest interest rate first. Mathematically speaking, this is the best way to avoid racking up even more interest charges as you work to pay down your debt.
Stick to your plan until your holiday debt is paid off. Hopefully, you didn’t go over budget too much. You can use things like cash bonuses if you signed up for a new card over the holidays and reward point redemptions to lower your balances as well. Look for ways to reduce what you owe as quickly as possible.
Finally, make a plan for the next holiday season.
Pay attention to how much you spent, account for increased spending for the next holiday season, and save up so that you don’t get stuck again.