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Beating the financial bluesOvercoming post-holiday debt In January, New Year's resolutions are top-of-mind, and many people are motivated to make a change. Losing weight and getting fit are among the top resolutions, but resolving to get a better handle on debt is just as popular. So how do you begin to tackle the looming pile of bills, and the sense of powerlessness that often comes with debt? Don't ignore the problem. Let those credit card statements be your inspiration to get your debt situation under control. It is never too late to develop a budget and start trimming debt. Take stock of your financial situationDevelop a good understanding of your finances for a clear and realistic view of where you can cut back. - Identifying the problem is an important step to changing your spending habits. Review all your receipts from the holidays. Where did you overspend? Was money wisely spent, or in hindsight can you see where you could have cut back?
- Stop accumulating more debt. Stay away from all of the post-holiday sales. If you continue to add to your debts, it will be that much harder to reduce the total balance. Putting away the credit cards may be the essential step to success. Instead, use debit cards, cash or checks. That way, you'll spend only the funds you have available now.
- Create a budget. List your sources of income along with financial obligations including monthly living expenses. See our
Knowledge Center Library for articles about how to prepare a budget, or try our onlinebudget planner.
Trim the financial fatSeparate your needs from your wants. When you reviewed your holiday spending, was every purchase necessary and on your original shopping list? Change your habits so that each purchase is planned and accounted for. What are some easy ways to trim the fat? Examine your monthly expenses and cut out the non-essential items. For example: - Quit paying costly parking fees and use public transit.
- Limit costly cash advances on credit cards.
- Change from a premium cable package to a standard package.
But be realistic about what to cut. You want to be able to stick to your plan. Inexpensive alternatives might be an option rather than completely cutting out the things that you enjoy. For example, if you normally buy a coffee every day, choose to brew your coffee at home. But then treat yourself at your favorite café once or twice a month. If you just can't seem to stop spending beyond your means, maybe it's time to acknowledge that you need debt help. Spending can be an addictive behavior, and credit counseling agencies can help you to manage your problem.
The U.S. Federal Trade Commission has helpful consumer articles about personal financial management, including Knee Deep in Debt. Put a dent in post-holiday billsOnce you've got your spending on track, how do you emerge from that pile of bills that just won't shrink? - Pay more than the minimum amount due. If you only pay the minimum amount due, it can take you many years to pay off your balances and result in significantly more interest paid. By reducing your monthly expenses you can use the extra money to make larger payments. Be sure to pay off the highest interest rate cards first.
- Consider Credit Counseling. If you built up a large amount of unsecured debt
(like credit card or department store accounts, or accounts in collections) refer to a credit counseling agency for help.
These companies, also referred to as debt management services, work with your creditors to restructure your unsecured
debts. With their debt management plan, you make one monthly payment to the credit counseling agency, and they pay your
creditors. Many of the creditors who participate in the program will allow you to reduce your monthly payment and,
after you establish a payment history, may reduce or eliminate your interest and late charges.
Companies that offer credit counseling do not lend you money.
Instead, they negotiate with your current creditors to get you debt relief. For more information about choosing a credit counselor and debt management plans, see the U.S. Federal Trade Commission
articles Fiscal Fitness: Choosing a Credit Counselor, and For People on Debt Management Plans: A Must-Do List.
The key is developing a realistic plan and setting an achievable goal. Whether it is to pay off a set amount of your debt per month, or to eliminate it altogether, a focused goal will help trim the holiday debt, ensuring your financial health for the future. Take control of your finances with our debt help tools. Use our calculators and budget planner to help you manage your money.
Related Money Management Articles:- 100+ Ways to Save Money and Lower Your Expenses - You may not know it, but there are literally hundreds of way to shave your costs and pocket your savings each month. All the money you spend on your food, household and entertainment are just a few ways to begin saving. Discover more than 100 different ideas for additional savings with this helpful guide.
- Protect Your Money by Avoiding Telemarketing Scams - We all know the routine - as soon as you get home from work, the phone begins ringing with too-good-to-be-true offers of fabulous vacations and contest winnings we managed to qualify for without doing anything in particular. Unless Ed McMahon is standing on your front porch, these interruptions are usually attempts to get you to spend your money. Before being lured into a possible telemarketing scam, learn how to protect yourself from being deceived out of your money.
- Enjoy the Holidays While Staying on Budget - The holidays are meant for relaxing and enjoying your family and friends. Yet, they most often result in additional debt because of the pressure people feel to overspend in order to please everyone. Simply identifying the things that throw you off budget during the holidays and making an effort to avoid them will help keep you out of debt and most likely result in a more enjoyable season.
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