It is not uncommon to have debt after the holiday season. Most people will charge gift purchases or put the cost of food or travel expenses on their credit cards and deal with the payments later. What can you do to eliminate your debt after the holiday season is over?
Determine How You Want to Eliminate Your Debt
The first question that you need to ask yourself is whether you would like to tackle the lowest balance first or the balance with the highest interest rate first. Taking care of the lowest balance first may allow you to see some sort of tangible progress in a short period of time. However, handling the debt with the higher interest rate first allows you to save more money in the long-term.
Put Down the Credit Card
When you are trying to get rid of debt, the last thing that you want to do is spend more money that you don’t have. Therefore, you may want to put your credit cards in a drawer or report them as lost or stolen. By reporting them lost or stolen, your current cards will be deactivated while you wait for your new ones to arrive. This provides you with about a week or two where you cannot charge any of your purchases.
Take a Second Job to Eliminate Your Debt Faster
To eliminate debt, you either have to cut back on your expenses or increase your income. Taking a part-time job can help you make more money that can go toward any outstanding credit card or other debt balances that you may have. In some cases, that second job could help you get experience in a field that you may want to work in full-time at some point.
Consolidate Your Debt and Lower Your Interest Rate
Interest fees and other charges can increase the amount that you actually pay to finance your holiday purchases. Consolidating your debt through a balance transfer or home equity line of credit may help you lower your monthly payments by lowering your interest rate. This allows you to put more of each month’s payment toward your principal balance as opposed to putting money into your lender’s pockets.
While you want to enjoy the holiday season, you also want to make sure that you don’t put yourself into a financial bind. Ideally, you won’t borrow more than you can afford to repay in a reasonable amount of time. If you do, be ready to make sacrifices to ensure that you get out of the financial hole that you have dug for yourself.