Many people overindulge in a variety of ways during the holiday season. Unfortunately, this may also include spending more on holiday gifts, entertainment and travel than originally budgeted. During the first few months of the new year, the credit card bills and expenses will begin to roll-in from holiday spending. The longer the debt hangs around, the more the holidays will cost you in interest fees.
The first step is to reduce your spending and apply the extra money toward paying off your credit cards. Track your spending for a week, by writing down when and where you are spending your money. This will make it easier to find ways to reduce your expenses. If you have holiday debts on multiple credit cards, develop a payment plan. Either work toward paying off the highest interest rate card first or pay-off the smallest debt first and work your way to the largest.
Make a plan now for next year, once you have paid off your holiday debts, put that extra money aside every month into a special savings account, then next year instead of using your credit cards, use the money you have already saved.
Source: Jennifer L. Hunter, Extension Specialist for Family Financial Management, University of Kentucky, College of Agriculture