How to Get Out of Holiday Debt

The holidays bring three things to most families. The first is an increased waistline for nearly everyone. The second is plenty of new toys for the children. The third is a hefty credit card bill for the parents. The pressure of debt following the holidays is well known, and something few enjoy having to handle. There are a few things you can do to prevent this problem from reoccurring, and to solve your current debt problem.

Pay Your Credit Card Bill Weekly or Consolidate

Credit card interest is accrued monthly, meaning that if you owe $100 at the end of the month, the interest will be calculated on that $100. However, if you can afford to pay $20 per week, do so, then the interest will only be charge on the remaining $20. This results in vastly lower interest fees, and a greatly lower time until the credit card is paid off.

Once out of debt, put the same amount of money back to cover next year's holiday expenses. The best way to avoid paying interest is never accruing the principal in the first place.

If you have ample income, and still plenty of credit card debt, consider rolling everything into a single loan and closing all but your oldest credit card. With interest rates at record lows, it is possible to save thousands of dollars in interest charges by doing this.

There is a reason for doing this – having all of those credit cards open for use may tempt you to add to your debt. That is why you should close all but the oldest card. This reduces the ability for you to get into more high interest debt.

Keep the loan life to a minimum; if possible find a way to be making the exact same payment every month. This will minimize the loan life while not changing your monthly budget. Remember – the goal of the game is to get out of debt. That can only be possible by minimizing the interest and the number of payments needed.

Lower Expectations

While tackling debt, any spare currency not being used to pay down the principal is being used to increase the interest. If you are struggling with last year's spending now, then have a blunt discussion with your family. Between toys and the ability to live comfortably in the New Year, most children will select the comfort.

Pay in Advance

If you do not have the money to pay for an item, and it is still several weeks out from the holidays, then put it on layaway. Make interest free payments on the item, and only pay a small fraction with credit on the eve of the holiday. This allows you to minimize the amount subject to interest, while still giving your child the gift he or she deserves.

Debt is not something to be ashamed of. Everyone acquires some throughout life. The trick is to get rid of it as soon as possible.

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How do you get out of debt after the holidays?

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