Wipe Out Debt

Pay off Holiday Debt!Did you overspend during the holidays this year?  You are not alone. 

Recent statistics from a National Survey report that 56% of consumers said they spend too much during the holidays. 

Over 30% of consumers say they have gone into debt as a result of unplanned holiday purchases.  Up to 43% of consumers surveyed say that their holidays are difficult to enjoy due to extra expenses and that holiday finances cause extra stress in their lives. 

Here is a plan to wipe out that debt.

How Did You Spend So Much?

Even if you had money set aside for the holidays, overspending happens easily.  While you are shopping for others, you see something that you needed anyway, and it is on sale, $$.

You had a gift in mind for your spouse but found a much better gift, that costs more than you were planning, $$.  While you are out shopping, you get hungry so you stop for something to eat, more, $$.

Then there is online shopping that makes it oh so easy to add one more item to the cart to earn free shipping.  Every time I go to checkout, the site is showing me just one more great item to buy, $$$!

Pay off debt faster

Or, my personal favorite, very cute impulse items!   My kids would love that gift, but I can’t get just get one of them!  Of course, I end up buying four, so I have one for each kid.  I often come home with four of some little item that costs $10 but ends up costing me $40+.  This can happen 3 or 4 times so I can easily spend a few hundred dollars that wasn’t planned.

Holidays aren’t the only time for common overspending.  Vacations, birthdays, and major events like graduations or weddings are other common events incurring major overspending.

Whichever method you chose to manage spending for the holidays, now it is time to catch up.  Whether you spent just the right amount or more than you were planning, make a plan now.

Track your Spending

Now it’s time to get back on track and repair the shopping damage.  Take a few steps to make the debt payoff process more manageable.  Consolidate, make the biggest payments possible and avoid high interest rates and fees.

Hopefully, you don’t have too many debts on many different accounts.  This makes those debts more difficult to pay off because you have to make several payments to different cards.     Stores love to entice you to use their credit cards for extra savings.  They make it so easy to open a new account as you stand at the register.  They will give you exclusive access to their special sales.  But if you take advantage of too many of these offers, you find yourself with many different debts to pay.

Your first move should be to combine and consolidate balances.  When possible, try to combine all these balances on one account so that you are able to make one large payment.   This helps you pay that debt off more quickly.




Take Advantage of Rewards Programs

When spending for the holiday, even if I have the cash, I prefer to use a card for my shopping.  I make a point to use only one of my Rewards charge cards for all my purchases.  I do this for several reasons.  Walking around with a wallet full of cash is not what I like to do.   When I use my card for purchases, I am earning rewards points which is a bonus.  **More about Rewards programs in this post.

Holiday returns are usually much easier if you used a credit card.   Most big stores will make the return directly to your card without the receipt.  This is to your advantage because it immediately creates a credit on your account and lowers your total balance.  You won’t have extra cash in hand and be tempted to spend it on something you don’t really need.

When I make all my purchases with one card, I can easily see all the data online.  This helps me with my holiday budgeting.  On one screen, I can see every purchase with the date and the total cost.  I know exactly what I have spent and can set a budget on how much more I can spend.  When I am looking at my debit or credit card purchases one

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Make a Payment Plan

Make a plan to pay off the holiday bills as quickly as possible.  Analyze your budget and determine the largest payment you can make to pay off this extra debt.  Using your monthly income, first subtract all fixed costs.   These include rent, mortgage, insurance, utility and other monthly payments.  Remember to set aside money for daily expenses like gas and groceries.  When you have determined how much money you have “leftover”, make the first payment.

Paying attention to your money and exactly how you spend it will pay off in the long run. 

Years ago, I hated even thinking about a budget.   And yet, it was one of the smartest things I ever did for myself.  No one taught me how to budget so I merely made money and spent money.  I had a vague idea of where my money was going, but finally organizing my accounts saved me money.  High Schools should include a mandatory course in personal finance!



I actually look forward to paying bills and updating my budget spreadsheets.  Seeing debt go down and savings go up is very rewarding.  The first time you really sit down to analyze your spending and create a budget, will be the most difficult.  After the initial budget, managing your spending becomes easier.

Easy Ways to Save Money by Spending Less

  • Stop shopping!  Put off NES- Non Essential Spending until you really need something

  • Eat Out Less, cook at home more often

  • Buy less food that gets wasted, buy only what you need now

  • Buy different foods that aren’t as costly, choose grocery stores with more reasonable prices. The cool trendy store is often rough on your bank account.

  • Cook in bulk for several meals. Leftovers save money!

  • Make your own coffee at home instead of buying on the way to work.

  • Bring your lunch to work instead of buying.

  • Limit alcohol expenditures. This saves money and calories.

  • Limit entertainment & Leisure costs. A boring week won’t kill you!

  • Before making a major purchase wait a week or two and see if you really need the item. If you still need it, search for a cheaper price or alternative.

Tell us your best money saving trick.  What works for you?

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