How to Get Rid of Christmas Debt

The Christmas holiday season is over, the presents have been unwrapped, the holiday feast leftovers have been put into the freezer, and you are looking forward to starting another year. Unfortunately, one of the first things you might have to deal with in January is a reminder of just how much money you spent on those gifts and good times you enjoyed during the holidays. While most of us are able to keep our spending under control, there are times when we have all unexpectedly gone into the red either by accident or through poor judgment. Fortunately, there are ways to tackle these bills efficiently and successfully!

1. Work out a budget.

One of the keys to not spending too much is working out a budget. If you neglected to do that, don’t worry: re-structuring your spending habits can help to get you out of the debt jam you now find yourself in.

Figure out how much money you have coming in each month and what you have to spend on essentials like rent or a mortgage, food, utilities, etc. Take the amount you have left, set aside some for emergencies and other variables, and then decide how much can be dedicated to paying down the amount you owe.
If you want to make a serious dent in your totals, be tough. It may mean cutting back on things like movies or the social scene for a while, but there are plenty of diversions available nowadays for little or no money. It will be worth in in the end.

2. Seek budget counseling.

If you find yourself unable to draw up and stick to a budget, seek outside help. If friends or family cannot be of assistance, there are a number of organizations out there that will do this for a fee. That charge can be in both the form of a consultation fee, in addition to a cost for you with each meeting.

There are also not-for-profits providing this service for a small charge, as well as some community groups that will do it for free. Seek recommendations, do online research, and decide which approach best suits your goals and the amount that you are able to spend. The services are confidential, so you do not need to worry about your money situation becoming a burden in other areas as well.

3. Talk to your creditors.

Depending on where you owe the money, you might be able to negotiate a longer period to pay back the debt in question or get a lower monthly total or rate of interest. Individuals are more likely to agree to this than institutions. If you have someone in your family who might be willing to lend you some money temporarily, this might be a quick and easy solution. Remember, Christmas is all about giving, not receiving, after all!

You may still have some luck with your creditors at a specific institution. It is best to do this before you begin missing minimum payments and your file is turned over to a collection agency. These firms can also be dealt with, though they tend to be aggressive and unpleasant, so try and take advantage of alternatives before this happens. If you find this sort of thing too stressful, many financial counselors will do this for you as a regular part of their service. Whether you or a counselor undertakes this, always remember to get any re-payment agreement in writing.

4. Decide which debt to pay down first.

Once you have a budget and plan in place, you can begin to take action. If you ran up debt on both your credit cards and your line(s) of credit, take a look at the interest rate charges you are facing. Credit cards almost always charge more each month than a line of credit, so tackling these debts first usually makes the most sense. In any event, make sure to pay as much as you realistically can.
The longer the debt lasts, the more money that you will be handing over to the companies involved, while getting nothing yourself in return. Merely paying the minimum is not an option if you want to deal firmly with your financial liabilities.

5. Raise additional income each month.

More money equals a greater ability to reduce debt, so think about how this can be accomplished. Is it possible to work additional hours at your place of employment? Can you take on a part-time job one day or even just a few hours a week? Look at your possessions and decide what you can and cannot live without. Serious self-examination will no doubt reveal that there are a number of things you have outgrown or no longer need.

Explore sites like eBay and Kijiji to see what similar items routinely sell for and put yours on the market. Also think about areas where you can cut back and save. For example, eat at home more often and avoid buying overpriced beverages like specialty coffee.

Once you have your Christmas debt problem conquered, remember to think ahead for next year. Showing how much you love your partner or family does not mean you need to spend beyond your limits. Christmas obligations come annually, but the potential financial burdens associated with them need not. Choose to be a smart and savvy shopper who is able to make the right choices and knows when to leave things on the shelf. If necessary, cancel some or all of your credit cards and/or lines of credit. Plan carefully and enjoy your next holiday season free of potential worry!

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Nicole Harding

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