Oh the shopping. And the spoiling. And the spending that seems to consume people from Thanksgiving to Christmas. Heck, statistics show that on December 26th, the day after Christmas, there is as much consumerism or more than during the pre-holiday season. And for a lot of people this spending is in the means of credit cards or loans, or other forms of money that they will have to pay back in the New Year. Hopefully, you had a nice Christmas, but if you are like 1/3rd of the population who puts the holidays on credit, you are likely drinking a sip from the cup of regret by New Years Eve, worried about paying off Christmas debt.
In this situation, it isn’t enough to know that you aren’t alone. Wise, money conscious people who spend wisely year in and year out will often loose their footing when it comes to money at the holidays. Suddenly, it doesn’t matter if something is on sale or not, if they have to pay shipping, or if it is something that their kids, family members or friends don’t really need – they buy it anyways. The pressure to make Christmas something special, and to have the best gifts to give the people in your life is sort of ridiculous if you think about it. The people that love you don’t want you to go into debt in order to buy them a pair of boots, or a Keurig coffee pot. And most people are simply only gifting because its Christmas, and they feel like they have to. Not because they want to.
Few people have the gumption to say no at Christmas. Telling people that you aren’t buying them presents, or deciding to just not participate are simply not options, right? If the kids want the Ipad2, you certainly cannot be the one to disappoint – even though it does cost two weeks worth of salary. You get the picture, but it’s too late now. Now you have to think about paying back all that money you owe.
The first piece of advice is to not make the same mistake year in and year out. Too many people do this. If you will be paying for this Christmas till next Christmas, then you have made a mistake. And you should learn from this mistake by taking a vow not to do it again next year. Make a firm promise, right now! Take a look around, and realize that in two weeks no one really remembers what you bought them over the holidays – which just drives the point home that doing too much is simply wasteful.
The next step is to set up some sort of Christmas savings account for the holidays so that when they hit it won’t be so hard. You could put $25 a week away in a Christmas account and have all the money you need to pay cash by December 25th next year. Even $10 a week would add up to a little over $500 by this time next year. This way you would have a budget for next year to avoid feeling the stress and pressure you feel right now.
The next step is formulating a plan to pay off the debt you owe you now. First off, pay it off as soon as possible. Those Black Friday deals won’t be much of a deal by the time you add interest to your purchases. If you received any holiday money, put it towards your bills and try to make a payment every time you get paid to get out of debt more quickly. Financial experts say that if you are expecting a tax return, or any bulk of money it is better to put it towards your debt rather than stick it in savings. This way you can start with a clean plate.
You also need to stop using your credit cards right now. You need to budget your living expenses and stop adding to your debt. If you have paid off a certain amount of debt with a credit card, the last thing you want to do is charge it again. If you continue using the credit – you will find yourself in a never-ending cycle of debt. Cut the cards in half right now, and decide that if you cannot afford it with the money in the bank, then you simply cannot afford it!
Think about asking your creditors for a lower interest rate or even transferring your balances to help reduce the amount of interest that you will owe. This works well, especially if you are planning to make regular on time payments with the new card. It would be wise to set up automatic payments on your accounts so that you don’t get behind or forget to pay something which will often break the agreements with lower interest rate cards and creditors.
You can also consider a debt consolidation loan. However, in doing so – if you don’t have good credit, you could actually end up spending more over time. If you choose a debt consolidation loan, make sure you get a fixed interest rate and that the payments are affordable. Try to plan to pay it off in at least a years time, if not sooner – so that you can break spending cycle during the holidays.
Don’t be afraid to talk to your creditors. One of the biggest mistakes that people make is avoiding the phone calls or not trying to make some sort of arrangement for their debt management. You cant draw blood from a turnip, but the truth is that you need to negotiate with creditors to try and get things back on track.
At some point, you have to wonder if all of this stress and worry is worth it. Christmas is one day during the year, and you shouldn’t be paying for it for months and months to come. If you cannot afford the extravagance of presents that you have been purchasing – then you need to just stop spending the money each and every year. The holidays are supposed to be about family, and love and peace and joy. You cannot experience any of those things if you are constantly worried about paying off Christmas debt.