The holiday season can be as expensive as it is exciting. While many people spend more money during the holiday season than at any other time of year, they may forget to set extra money aside to cover those expenses. If this situation sounds familiar, you’re not alone.
The presents are opened, you’ve returned home from visiting family and you’ve taken your holiday décor down, but there’s one thing that’s still looming over you: that pesky holiday debt. Don’t worry – just yet – there are steps you can take to get back on track in no time and avoid making the same mistakes next year.
Savvy Ways to Pay Off Holiday Debt
So you had a very merry holiday season. In fact, it was so merry that you’re afraid to open your credit card bills. While no one enjoys facing their post-holiday debt, it’s important to do so immediately, so you can create a plan to pay it off as quickly as possible. Put the following tips into action:
- Don’t avoid paying credit card debts: While making additional credit card payments may not be what you feel like doing with your extra funds, it’s essential. The longer you take to pay off your holiday debt, the more interest you’ll accrue on your cards. Avoid ending up even deeper in debt at all costs.
- Return unwanted gifts: Taking gifts you don’t want back to the store may seem like a hassle, but it’s a sacrifice worth making. With this small effort you can earn a little extra cash to help pay down your holiday debt. Most stores extend their return policy for the holidays, but only for so long. Don’t procrastinate on making those returns or you may get stuck with store credit at best.
- Cut unnecessary expenditures: You may need to make some sacrifices to free up extra money before you can pay off your debt. For example, trade in your morning Starbucks run for some homemade coffee and avoid the mall at all costs until your holiday bills are paid off.
Tips to avoiding overspending next year
After you pull yourself out of debt, the last thing you’ll probably want to think about is the next holiday season, but it’s wise to do so. Planning in advance for next year will allow you to avoid getting in over your head with extra expenses yet again. Use these ideas to start preparing for the next round of gifts, food and travel arrangements:
- Create a holiday budget: Instead of buying gifts at random when you see a product that reminds you of a loved one, set a specific dollar amount that you can afford to spend on each person. Before setting out to buy gifts, plan on buying items that fit into the budget you’ve created.
- Book travel in advance: The holidays are the most expensive time of year to travel. Purchase your plane tickets as soon as the airlines release their flight schedules for that period. While buying tickets too far in advance isn’t always the best idea, it is during the holidays, as it’s unlikely that prices will decrease as time goes on.
- Maintain a separate savings account: Start putting money aside immediately to cover the extra expenses you incur during the holidays. Many financial institutions offer custom savings accounts with terms ranging from 3 months to 5 years into the future. This is a great way to encourage you to start saving early.
Don’t beat yourself up if you’re currently suffering from a holiday spending hangover – it happens to the best of us. Instead, dedicate yourself to getting out of debt fast and create a plan in advance to avoid getting into the same situation again next year. Consider this year a lesson learned the hard way and dedicate yourself to becoming a bit savvier with your finances from now on.