Ahh, the holiday season. A wonderful time of year filled with fun, family — and, for most of us, increased financial burden.
Every year, thousands of Americans find that it’s all too easy to become swept up in the whirlwind of winter spending, letting Santa put a few too many gifts on our credit cards. As a result, we can find ourselves with a holiday financial debt after the inevitable bills land on our doorstep.
In fact, the average American plans on spending $738 on holiday gifts, totalling about $181.2 billion spent throughout the country, according to a study on holiday debt by Finder.com. About $103.3 billion of that will be put on credit. That’s A LOT of presents.
If you find yourself suffering from the winter financial debt blues, fear not! With a little planning and the right information, the situation can be effectively managed in no time.
Check out these five steps to get yourself on track to cure your holiday financial debt hangover.
1) Straight up, stop stressing.
The first step to managing post-holiday financial debt is to realize this is a situation that many people face. Some 64 percent of Americans report that they are in a larger amount of debt at the end of the year due to the holidays.
If you are feeling ashamed or anxious about paying off the bills, understand that you are in NO WAY alone. There’s no shame in seeking a little financial assistance. Plus, a new year is the perfect time to start being more financially conscious.
2) Set-up automatic payments.
We’ve all been there: You planned on paying down that credit card bill as soon as your paycheck hits. But when the money is sitting in your checking account, it’s more tempting to spend a little. Avoid this temptation by setting up automatic payments.
Most online credit cards offer automatic payment schedules that deduct a pre-determined amount every month. Figure out how much money you have coming in, and schedule automatic payments to occur shortly after your direct deposit hits. This will lessen the temptation to stray from your financial plan.
3) Curb the credit.
One of the best steps to controlling the amount of interest you accrue is to STOP putting additional payments on your credit card. While you shouldn’t close a long-standing account with a positive payment history (doing so will hurt your credit score), you should put the card away until debts are paid off.
Carrying your card brings with it the temptation to tack on additional purchases (and additional interest). So switch over to a debit card or cash to avoid spending money you don’t immediately have on hand.
4) Consider a balance transfer.
If you’ve got multiple credit cards with high minimum payments and interest rates, a balance transfer could be a huge help in getting your financial debt under control. With a balance transfer, you can move the balances of your current credit cards onto a new card with a low introductory APR.
However, keep in mind that balance transfers are a temporary solution to crippling interest rates. They will not replace the need for budgeting and credit monitoring.
5) Don’t be afraid to ask for help.
If you are struggling to make the minimum payments on your cards, consider requesting “temporary hardship” status from your creditors. Creditors have an investment in keeping you with their service. If you have an otherwise regular payment history, many creditors will assist you in creating a payment plan to get you back on track.
Ready to begin erasing your financial debt?
The start of a new year is an ideal time to gain control of your credit. Even if your credit score has taken a hit from your financial holiday hangover, planning and budgeting can quickly put this debt behind you.
2017 is the year you don’t give up. Remember: No matter how large your holiday financial debt, there are options to conquer it.