Holiday Debt Hangover
Posted by gtong on January 12th, 2010
How much did the holidays cost you? With cost of traveling, food, drinks, and gifts, holiday debt can accumulate fast, and it will hit you all at once. According to the National Retail Federation, 36.3% of Americans purchased these expenses on credit, and 65% of these people are still carrying their debt from last year!
The holidays are a time when retailers offer huge discounts, so it’s easy to see why there is so much consumer debt. Eliminating your consumer debt is easier said than done, but it’s possible. So sober up! It’s time to get rid of your holiday debt hangover.
Prepare: Even before your bills start to come in, start making a list of all the debt you may have accumulated over the holidays. Don’t let each bill that comes in surprise you.
Letting Go: It’s time to let go of any gifts you bought for yourself. If your debt is out of control, with no way to pay it off in time. Reduce the amount you owe as fast as you can. Although you’ve always wanted that HDTV, you should put it off until you can truly afford it. If you are able to return anything, it will reduce your bill, if not, you can try selling it yourself.
Using Rewards: Some cards offer you cash back rewards. If you accumulated enough to earn you a check, this can be used to pay down some of your holiday debt.
Be On The Lookout: With the CARD Act deadline coming in, credit card companies are trying to get under the wire by increasing rates and changing policies. You should be aware of these changes, especially of your APR, as some APRs have gone from 9% to 28%. If your APR skyrockets, it will force you to spend additional time and money to pay it off. Although it is difficult to do, you can try to negotiate a lower APR if this is the case.
Use A Loan: May seem a little bit backward to do, but depending on your situation; it could help you save some money on interest. If you are unable to negotiate a better APR with your credit card, you can try getting a loan, such as a Home Equity Loan, to pay off your credit card, while it still leaves you with the debt, you’ll be able to get a better APR. You can also try social lending websites, such as Lending Club, you will be borrowing directly from an individual, and you will be able to search for various amounts and rates.
Freeze Your Debt: With a large amount of debt looming, it can become overwhelming. Freeze your debt in place by using cash or your debit card. Adding on more debt as you are trying to pay it off will only leave you in a bigger mess.
Many people get caught up with holiday cheer and end up overspending, and your holiday debt for the first time can make you sick, but there are ways you can manage and reduce the impact it will have on you. Sticking with the basics of debt management, you can clear things up sooner rather than later.
How severe is your debt hangover?
Leave a Reply