RSS Email

4 Tips To Beating Debt When Holiday Bills Linger

The halls are un-decked, the decorations are packed away, and the tree (and all its fallen needles) have long since been removed from your house. On the surface, it looks like the holidays are finally over, but for many Americans, there’s more than what meets the eye. After a long season of shopping, credit card debt remains as an expensive reminder of the holidays, and it’s often the focus of New Year’s resolutions. If you ended up charging more than you expected this year, you wouldn’t be alone. Let’s take a look at some pre-holiday shopping polls to see how the nation expected to overspend, so you can learn some tips to pay off any lingering debt.

Holiday bills

The Stats: Nerd Wallet and the NRF’s pre-holiday shopping surveys

The folks at Nerd Wallet published its 2017 Consumer Holiday Shopping Report back in November of 2017. The report analyzed spending habits of average Americans by crunching the numbers of an online Harris Poll survey completed in October by more than 2,000 adults. Some of the questions respondents had to answer included how they intended to plan for the holidays, when they expected to shop for presents, and how much they prepared to spend on these gifts.

At an average of $660, their projections were similar to the National Retail Federation’s holiday shopping report. Though the NRF included other spending categories, such as miscellaneous purchases and non-gift holiday items, it projected Americans would spend $608 on gifts during the 2017 holidays.

This isn’t a big change from holiday spending in 2016. According to Nerd Wallet’s report, roughly 80 percent of respondents anticipated they’d spend roughly the same as the previous year. If actualized, this admission promises challenging times for the average American. One of the report’s key findings was that 56 percent of shoppers acquired substantial credit card debt during the 2016 holidays — many of whom were still paying it off as they shopped for gifts in 2017.

Debt advice: how to undo the credit consequences of holiday overspending

Overspending in 2017 when still paying off debt from 2016 only compounds the problem. If you don’t want to add 2018’s holiday shopping in the mix, you need to simultaneously pay off your debts and plan for the future, so you don’t go into debt this year.

From your position underneath a mountain of bills, these two tasks can sound like trying to juggle flaming chainsaws while riding a unicycle, but it’s not as difficult as you may think. The trick is to divide it into smaller subtasks that are easier to attempt and easier to complete.

#1: Table a budget: Your first task must include making a budget. This financial document can help you reroute money towards credit card debt and online loan repayments. In the future, once you pay these debts off, it will also help you contribute cash towards your 2018 holiday shopping fund. It doesn’t come easy to everyone, so don’t be discouraged if you feel out of your depth. There are a variety of online resources that can help you table an effective budget, including government webpages and award-winning money management apps.

#2: Cut out unnecessary purchases: A budget helps to identify harmful spending habits, so you can eliminate them. It also gives purpose to your spending, so you aren’t guestimating how much money you can spend on things or forgetting how much you’ve already spent. Use your budget to find the silly ways you spend your money thoughtlessly. Be vigilant; it’s not just your daily trip through the drive-thru that’s at fault. Little things like going over your cell phone’s data limits, spending too much on auto insurance, or opting for brand-named items could be the reason why your hemorrhaging money.

#3: Use a calendar:In the grand scheme of things, it’s easy to cut out your daily latte. A simple post-it note to remind you of your promise and a cupboard full of ground coffee beans for a homemade brew can help you get over the habit. What can be a challenge is tackling those bad spending habits like your insurance. It’s not as simple as avoiding the drive-thru on the way to work. It requires researching alternatives on your own, speaking with an auto insurance representative, and making the switch.

When the solution involves several complex steps like the one above, write each task into an agenda. It can be a simple wall calendar, a pocket bullet journal, or an online app. The format doesn’t matter so much as you keep to it and organize your responsibilities according to a date and time. Once you carve out a specific time to tackle these objectives, you’ll have a better chance of actually achieving them.

#4: Be strategic: Once you eliminate those unnecessary purchases, you’ll have more excess cash to put towards your credit cards and payday loans. Which ones you use this money on is important. Financial experts suggest you tackle those debts that have the highest interest rates first because these debts can grow faster than those with lower rates, even if they have less on them.

It’s not the only way you can pay off debt. If you need the gratification of success to keep you motivated, try paying off the smallest debt first. It can be empowering to see a zero balance on the statement, and the sense of accomplishment can encourage you to keep budgeting.

The bottom line: stay determined

New Year’s resolutions are notoriously hard to keep. Most people ditch theirs less than two months after they make them. Don’t join them. It might not be easy, but when you follow a detailed plan and stay motivated, you can slowly chip away at the debt your holiday shopping created. More importantly, you’ll have the tools to help prevent adding debt to the next round of holiday shopping.