One of the realities of the holidays is all the spending. It seems as though there are any number of things to spend money on. From gifts to decorations to entertaining, there are expenses piling on top of expenses. And, caught up in the spirit, it seems natural to pull out the plastic. However, once the warm holiday glow wears off, you are often left with the realities of Christmas debt. It is important that you pay that debt off as fast as possible.
Paying Off Christmas Debt
The first thing you have to decide is that paying off Christmas debt its a priority. You might have been caught up in the materialism of Christmas, but now is the time to snap out of it and realize that there are more important things than having stuff. Decide that paying off your credit card debt is important, and one of your main priorities. Once you have made that decision, you can start planning your next steps:
- Where can you cut back?: You should be making money resolutions and getting your money ready for 2011 anyway. This means that you should look at your spending and see where you can cut back. You just had a great deal of fun, and now it's time to pay for it. Cut back on unnecessary spending and put that money toward paying off your Christmas debt.
- Look for ways to earn more money: If you want to pay off your Christmas debt fast, you will need to earn a little more money. An increased income can be put toward paying down your credit card. You can start a side business from home, do odd jobs around town, or get a temporary part-time job to help pay off your Christmas debt.
- Move your money to a low interest credit card: You can pay off your Christmas debt faster if you are paying less in interest. A low interest credit card can be a great help for you. Consider a balance transfer so that you can make payments that go more toward the principle than toward interest. Your debt will be reduced that much faster.
Prevent This from Happening Again
Your next step should be to take measures to avoid having this happen again. Getting stuck in the cycle of Christmas debt can lead to frustration and financial bondage -- not to mention a yearly dose of stress. It is a good idea to take steps to prevent this from happening again.
The first thing you can do is to resolve to mange your credit cards better. Instead of using your credit cards as some sort of last resort, or as a way to recklessly make purchases, create a plan for your credit cards. Incorporate them into your budget so that they are paid of regularly.
Next, you can start saving up money for next year. Look at what you spent on the most recent holiday season, and divide that number by 10. Set aside that amount of money in a high yield savings account each month from now (or February) until October (or November). By the time next Christmas rolls around, you will have saved up your Christmas budget, plus interest. There will be no need to pull out your credit card. With a little planning, you can pay off your Christmas debt quickly, and prevent this from happening again next year.
Image source: Andrew Bossi via Flickr
This post was included in the Carnival of Personal Finance, held at WalletBlog.
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