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Curing the Holiday Debt Hangover

The holidays are a time of love, family, and joy, but, for many, they are also a time of excess. From weight gain to overspending, the holidays encourage a bit of overindulgence in many aspects of life. You may have resolved not to overspend this year, but between food, gifts, parties, and other holiday activities, that resolution can be difficult to stick to. If you overreached financially during this holiday season, you’re certainly not alone. In 2007, Americans put over $50 billion on their credit cards before the holiday shopping season even arrived. Of course, this number spikes even higher when the spending frenzy of October-December hits. However, if you overspent and are left with a painful holiday debt hangover, you can pay off holiday debt with these five simple tips.

Five Steps to Eradicating Holiday Debt

Even if your holiday debt is substantial, you can overcome it without taking years to do so. Just follow these five easy steps:

1. Evaluate the damage. As painful as it may be, you need to get an honest assessment of what you spent over the holidays. Gather your receipts or your online credit card statements and tabulate the grand total. Don’t wait for your credit card bills to arrive in the mail to start formulating a plan of attack.
2. Implement temporary spending cutbacks. To come up with the money to pay down your holiday debt quickly, you will have to make some temporary cutbacks in certain areas of your spending. Remember, you will only have to keep these cutbacks in place for the few weeks or months it takes to pay off your debt. Some areas in which to consider trimming spending might include dining out, gourmet coffees, clothes, gifts, vending machines, travel, and entertainment expenses.
3. Create a plan. The simplest holiday debt payoff plan is this: save all the money you can and devote it toward your debt. You’ll need to figure out how much you can save per month by cutting back and compare it with how much you owe. For instance, if you owe $600 and can save $200 each month, you will need to keep your cutbacks in place for three months.
4. Don’t dawdle. Your motivation is more likely to last if you can pay your debt off as quickly as possible. Stick to your plan and resolve to get it over with as soon as you can. It may take discipline and determination, but it will be well worth the effort.
5. Be prepared for the next holiday season. Instead of falling into the holiday debt trap again next season, start saving early in the year for your holiday expenditures. A good goal is to try to save around $1,000 for gifts and other expenses. That way, you can pay in cash and avoid a holiday debt hangover altogether.