After all the celebrations are over and the leftovers are gone, it is time to take stock of the holiday credit card damage. Especially after a year of staying home and isolated from others, it feels so good to spend time with friends and family again. As you assess your expenses from the holiday season, it is wise to have a plan to pay off your credit card debt quickly and efficiently. How much did you spend?
It goes without saying that it is never advisable to spend more than your means, but if you have a plan on how to pay it all off, things become more manageable. Here are 10 easy ways to pay off credit card debt and assure your budget stays in order in the new year.
1. Take stock of your finances and plan your budget. In the new year, don’t let your budget get out of control. Review the amount of money you want to spend each month and allow for special occasions like July 4th barbecues, Thanksgiving grocery bills and holiday gifts. This means that some months may have smaller spending budgets than others, but you will find that you carry less credit card debt as a result. Being mindful of your spending patterns and looking at the big picture at the beginning of the year (rather than deciding if something fits your budget each time you find yourself at the cash register) can help you manage your expenses. Keep in mind the monthly bills you have to pay like rent, cable, cell phone bills and groceries when planning your budget.
2. What’s in your wallet? We often get sidelined by the promise of special perks and benefits from credit card companies. We are bombarded by advertising and promotional offers. Even on the airplane, they push credit cards to a captive audience. But, do you have more than you need? Assess which cards work best for your spending patterns and ditch the cards with high annual fees that you don’t need. Also, review the interest rates on each card if you carry a balance, and be sure to pay off the cards with higher interest first.
3. Check your credit score, it’s free. It is important to know where you stand, and your credit score can swing lower if you are carrying a balance after a lot of holiday spending. Use one of the many free credit score services to take stock of where you stand and work toward improving it one month at a time.
4. Strive for 10% savings. What can you eliminate from your daily spending that you can do without? Look to slash at least 10% of your costs on a daily or weekly basis. Can you make coffee in the office instead of spending $4 at the coffee shop each morning? Can you bring lunch one day a week instead of eating out? Make a habit to cut 10% of your daily spending, and put the savings into a rainy day fund so that you don’t get caught with big bills later in the year. Without making major changes to your life, a minor cut in spending here and there can yield big results.
5. Use tax time to your advantage. No one likes preparing their taxes, but view it as a way to assess your financial situation and look for ways to improve. If you have a refund on the way, use the newly found cash wisely (perhaps for that rainy day fund?) rather than spending it wistfully. If you owe extra money, consider upping your saving habits to 20% so that you are better prepared for next year in case you owe the government money.
6. Consider off-season spending. If you are looking to save big bucks, never buy things at the height of demand. While you can’t buy a turkey a year in advance for Thanksgiving, you can buy Christmas-themed paper plates and napkins for next year in January when they are on sale or Halloween candy in September before the mad rush. This is a great way to save more on the things you need without overpaying. Consider when things will go on sale and buy them in advance.
7. Spread out your shopping list. Consider buying things in small bursts rather than all at once. This is a great way to avoid accumulating debt since you can better manage your spending patterns. For example, consider shopping for one holiday gift or birthday gift each month rather than all at once. You will find that you are more conscious of how much you spend and also feel a little less stressed in the process.
8. Make a habit to put aside some extra cash. Each month consider putting away a bit of money to save for holiday spending or special occasions later in the year. In addition to making habitual changes to your spending patterns, this extra budgetary move can serve you well when it comes time to avoid holiday credit card debt. It also works for other big expenses whether it is a family vacation you are planning, college for the kids or a special treat for yourself. Saving a few dollars a week can add up to big savings later in the year. You just might surprise yourself!
9. Shop around. Using search engines and shopping portals can help you save quite a bit. Don’t just buy things from the same place you always have. You might discover big savings, shopping club discounts and cash-back offers when you shop around. Don’t forget about free services like Fetch, where by simply scanning the receipts from regular shopping purchases you make, you can earn cash back in the form of gift cards. That’s a great way to save money and avoid holiday credit card debt.
10. Think twice before every purchase. It never makes sense to carry a balance on your credit card given the interest rate that banks charge. Think twice before charging something to your card. Do you really need it? Can you find it elsewhere cheaper? Do you have a way to pay it off? Being more conscious about every purchase you make can help avoid needlessly paying banks interest fees. Consider what you could do with the money you’re wasting on fees. Could you go out to a nice dinner or splurge on a spa treatment for yourself? When you associate the lost opportunity that goes with paying credit card interest fees, you might be a bit more mindful with your spending.