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4 Smart Tips for Reducing Your Debt after Holidays
The holidays may be over, but the debt isn’t. Check out these tips for reducing your debt after holidays.
It’s no secret that the holiday season can cost a lot of money. Last year, the CBC reported that the average family spent an average of $643 on gifts alone! And that figure doesn’t include money spent on décor, food, or travel.
While people are putting away their holiday decorations and looking towards the start of the New Year, bills are starting to make their way to the mailboxes of those who used loans or credit cards to fund their holiday spending.
Tips for reducing your debt after holidays
If your holiday spending is stressing you out, here are a few tips to help you reduce your debt after the holidays and to help you work towards your financial goals:
Assess Your Holiday Spending Debt
If you placed your purchases on multiple credit cards or took out a loan, it’s time to sit down and figure out how much you owe. Before you make a plan to tackle your financial situation, you should also look into the repayment information for each debt, including:
- Payment due dates
- Minimum payment amounts
- Interest rates
If some debts have higher interest rates, you should consider paying the minimum amount on the debts with smaller interest rates and paying more each month to the ones that have higher interest rates. If you can pay more than the minimum amount each month, that’s all the better! Your debt might seem overwhelming right now, but once you start repaying it, seeing the amount owed go down each month will feel like you’re making progress.
You should also consider using a debt consolidation service to help you manage your debt, especially if you have higher interest rates. A debt consolidation company will take your debts and combine them into one with a lower interest rate.
Plan smarter for next December by:
- Putting a little money each month into a separate holiday savings account
- Minimizing your credit card spending
- Making a clear plan for what you’re going to buy and sticking to it
- Asking for the kid’s Christmas lists early, so you can compare prices and get the best deals possible
- Avoiding impulse buys
Sites, like Pinterest, are full of fun and unique craft ideas that could easily become your family member or friend’s favourite gift. Not only will homemade gifts save you money, but crafting together is a fantastic family activity that will help you avoid the stress of the mall. Plus, you can customize the items to fit the giftees’ needs and taste. It’s a win-win!
Think Long Term
It’s easy to get caught up in the hype of the holiday season and feel that it’s necessary to go all out with the gifts, the food, the decor, etc., but it’s really not. The holidays can still be wonderful without all the bells and whistles, and it’s not worth going into more debt for it. Keep long-term financial goals at the forefront of your mind, and focus on time with family and friends, not just the monetary aspect of the holidays.
Thanks for checking out tips for reducing your debt after holidays.
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FAQs about Tips for Reducing Your Debt After Holidays
How do you reduce debt?
You can reduce debt by consolidating it, paying off debt faster, or asking for debt forgiveness.
What is a good credit score?
Credit scores range from 300 to 850 and is a one-number reflection of your credit history. A high score says you’re a good investment and are likely to pay back your loans. A low score says you may not have the ability to repay debts or that paying them back is not the priority that it should be.
Should I close lines of credit I’m not using?
Typically, no. (It’s also not a good idea to request lower credit limits.) While these things may help curb your spending, it can actually hurt your credit score.
How long does negative information remain on a credit report?
Most negative information (like late payments) remains on your credit report for seven years. Some information remains longer.