The Christmas holiday is a time for spending time with family and friends – and spending money on all the things that the advertisers tell us are essential to a happy Christmas. By the time you’ve sorted out all the presents, purchased enough alcohol for the whole street and bought more food than an army could reasonably be expected to eat, you could find yourself with a post-holiday debt that will take years to pay off – unless you participate in some debt reduction strategies as soon as the decorations are packed away.
How much do you owe?
In order to reduce debt, you need to know how much you owe, and how much interest you are paying on each debt. Make a list of your credit card and loan balances, along with interest rates and minimum payments. Now you can work on strategies to reduce the debts as quickly as possible.
Keep a record of how much you pay off each month, and where the money comes from to do it, so you can work out which strategies are working well and making a considerable dent in your post holiday debts. It’ also empowering and encouraging to see the numbers falling.
Live from the store cupboard
Everyone buys and eats far too much over the holidays, so cut down on grocery shopping for a few weeks and use what you save to reduce your post holiday debts. Serve cheap yet nutritious meals such as home made soups and pasta with tomato sauce. Not only will this help to reduce your holiday debts, you could also lose some of the pounds you gained over the holiday season.
Give up something non essential
If you always have lunch in the staff canteen, take a packed lunch from home and put everything you save by doing this into a jar each day. At the end of the month, use these savings to pay off some of your debts. Even the occasional coffee can soon mount up. If you don’t have a vacuum flask, invest in one and take your own hot drinks with you. Again, be sure to set aside the money you save, otherwise it will just be swallowed up into the family budget.
Bring in some extra money
This is easier than it sounds. Go through the house and find things that are still useful, but maybe have sat on a shelf in a cupboard for months or even years. Sell your inwanted stuff on EBay, or organise a garage sale. Keep the proceeds separate, and use them to make extra payments on your post holiday debts.
Lots of companies buy unwanted gold, and this may be the time to round up those single earrings and broken bracelets and realise some cash to pay off your debts. Beware of companies who offer to buy your gold by post – many will offer only a fraction of the true worth, and will gradually increase the offer if you complain. A reputable high street jeweller is likely to offer a much better deal, and you won’t have the hassle of trying to get your gold returned.
Maybe you could take on an extra money-making enterprise – become an Avon representative, for example, and use your commission to pay off that holiday debt. Be strong, though – don’t spend all the money you earn on cosmetics for yourself. However, you could use a little of the commission to buy gifts for birthdays and Christmas 2011.
Transfer the balances
In January, many credit card companies offer 0% balance transfers. Consider moving your post holiday debt to one of these cards, then divide the amount you owe by the interest free period. For example, if you transfer a debt of $900 and there is a six month interest free period, you would need to pay $150 per month to clear the debt before interest is applied to the account.
Once you’ve paid off those holiday debts – or even while you’re doing it – start to plan ahead so you’re not caught out again. There are several ways to do this. Pay a fixed amount each month into a savings account, or start to buy or make gifts now. Pick up bargains in the sales – but be sure to pay cash, and not add to your existing debts. Resolve that Christmas 2011 will be the year of the Pay as you Go Christmas. You know it makes financial sense.