Christmas is barely over, and the New Year is rapidly approaching. Now isn’t exactly the time you want to think about what to do about the debt that has crept up from spending on the holidays, but it is a great time to make a plan to wipe out that debt as quickly as possible. Most people end up spending more than they would like to every year. This causes them to go into debt; and if that debt isn’t taken care of it can be a huge drain on your finances. Here are some tips to get out of debt quickly, and get on track for next year’s holiday season.
Determine Your Holiday Debt
The first step to getting out of holiday debt quickly is to figure out just how much you have. This shouldn’t be difficult, since you will soon be getting statements showing what you owe. If you have more than one credit card that you owe on, create a simple spreadsheet that shows the amount and the interest rate.
Call Your Card Companies
Most people don’t understand that the interest rate they are paying is not set in stone. A five minute phone call can help to reduce that rate immensely, and help you pay off your holiday debt sooner rather than later. Keep in mind that the first person you speak to will likely say that they can’t change your interest rate. Politely ask to speak with someone who has that authority. If they push back, tell them you have a 0% interest balance transfer card ready to go, and you will be canceling your account with them if a deal can’t be reached. Be prepared to back up your statements.
Pay Extra on the Highest Interest First
Once you have negotiated the interest rates on all of your cards, it is time to make a plan to wipe them out. Your spreadsheet will tell you how much you owe and what the new interest rates are. Pay the minimum on the lowest interest cards, and put all of your extra money toward the highest interest card. When that one is paid off, move on down the line.
Slash Expenses and Earn More on the Side
Until your holiday debt is gone, no more extra expenses. Cut the cable out, stop dining at restaurants, avoid frivolous purchases, and even keep the lights off to save on your utilities. The goal is to have as much money as possible to wipe out that holiday debt. You may want to pick up some extra money by selling unneeded items, shoveling sidewalks and driveways, or starting your own side hustle.
Use Your Tax Refund
If you haven’t paid off your holiday debt by the time you get your tax refund, you can use that to wipe out the remainder of it. But then take it one step further. Anything that remains from your refund should be set aside to avoid debt when next year’s season comes around. Set up a side account at your bank (most will do this for free), and then put another $50 into it every month. Use that money for Christmas presents and avoid the fiasco in the future.
Hire an Accountant to Help
If you need help planning your holidays, an account in Billings, Montana is probably not going to help you out too much. But here at Practical Taxes can help you get the biggest tax refund possible. You may be surprised that you have more coming back to you than you originally thought. With his services you can get your holiday savings back on track quickly.