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How to Manage Your Holiday Debt

Now that the holiday’s are over, you have to figure out how to pay for everything you had purchased.  While there are some people who were able to pay cash for everything, there are others that used a little plastic card to pay for every thing.

According to a Consumer Reports poll, six percent of us are still paying off holiday debts from 2010. That means any new purchases racked up over the past holiday season will inflate those interest charges and make paying down the old and new balances more difficult and expensive.

If the bottom line on your bills is looking ugly, it’s time to get a financial-management makeover. Consider these tips for balancing your holiday debt:

1.  Double and Triple Up

Multiply your credit card minimum payments two or three times to reduce the amount of interest you’ll end up paying.  Merely meeting the minimum means you’ll never see bottom.

2.  Now’s the Time to Negotiate

Talk to your credit card company about negotiating a better rate on interest, fees and other expenses.  If your interest rate is above 15 percent and they won’t negotiate, it may be time to transfer much of the balance to a lower-cost card.  Just make sure you pay off the debt before the interest rate climbs again.

3.  Go On a No-Spend Diet

Stick those credit cards in the freezer, if you have to, but do what it takes to avoid impulse shopping sprees.  Better yet, give them to a trusted friend of family member for safekeeping.

4.  Get Couponing

Using coupons for necessary purchases not only saves you money, but the practice helps you make more educated purchasing decisions.  You can find online and printable coupons for thousands of stores on CouponSherpa.com or download their mobile app for instant access to coupons while you shop.  

5.  Stick to Cash

There’s something about parting with greenbacks that makes us less likely to spend.  Keep a budgeted amount on hand and stay away from the cards.  Using the envelope system is especially helpful in tracking your cash spending while working towards financial goals.

6.  Cut Back on Luxuries

You’ve had your fun during the holidays; now it’s time to get serious.  Cut out the restaurants, nail salon and triple shot mocha latte until the bills are under control.  Of course, too strict of an economic diet is as easy to break as a weight-loss regimen.  So figure in an occasional, small splurge to keep you going.

7.  Set Small Goals

Don’t try to do everything at once.  If paying off credit cards in three months means going hungry, you’re biting off more than you can chew.  Set smaller, obtainable goals and you’ll appreciate the final results more.  For those with multiple credit cards with high balances, try paying on card at a time to feel that sense of accomplishment needed to push on to the next goal.

8.  Meet with a Financial Planner

If you’re barely treading financial water, it’s time to get some assistance.  A professional financial planner can help you establish a reasonable plan that won’t leave you paying off debts until next Christmas.  You can find a qualified guide through the Certified Financial Planner Board of Standards website or you might check for non-profit assistance.  

These are really great tips provided by Andrea Woroch, a consumer and money-saving expert who has been featured among top news outlets such as Good Morning America, NBC’s Today, MSNBC, New York Times, Kiplinger Personal Finance, CNNMoney and many more!

Dan and I choose to not use any credit cards.  Early in our marriage we had a little trouble with credit cards and vowed to not use them any more.  If we don’t have the cash to pay for something, then we don’t get it.  As for paying for the holidays, this year we lucked out.  I had a bunch of Amazon.com giftcards saved up AND I won a giftcard to Target…while my kids didn’t get EVERYTHING they asked for, Christmas wasn’t a total bust this year like I feared it would be.

Happy New Year Everyone!!!

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