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How To Pay Down Those Holiday Debts

Woman depressed over billsIf you’re like us you probably over did it a bit – or even more than a bit – on your holiday gift giving. We try to budget carefully but always forget that tip we need to give to our newspaper delivery guy, that cousin in Toledo that deserves a present or the cost of that holiday dinner at our favorite upscale restaurant we always treat ourselves to. Plus, we always manage to spend more on some of our family members than we had anticipated.

If you did something like this and those (ouch!) credit card bills have you worried, what could you do to pay off those holiday debts quickly? Here are some suggestions you might find helpful.

Write out a list

Sit down and make a list of all those holiday-related expenditures you paid for with a credit card. If you see you won’t be able to pay them all off at once, divide the list by credit cards and then prioritize them by their interest rates. If you pay off the cards with the highest interest rates first, you will save money on interest charges over the next few months. And you should find it easier to create a realistic pay-off plan when you know your total holiday debt load.

Use your annual or holiday bonus

If you received a nice check as an annual or holiday bonus, you might want to use it for a luxurious vacation or some other fancy purchase but resist the temptation. Put the money instead towards paying off your holiday debts – to improve your financial situation. Trust us. You’ll feel much better when you’ve paid off those credit card debts than if you’d spent a week at the beach – where the memories you made soon fade.

Stop using your credit cards

Stop using your credit cards while you’re tying to pay down your holiday debts. Take a break from using them until you get your finances under control even if those cards have points or great cash back rewards. The best way to stop using credit cards is to leave them at home when you go shopping – so you won’t be tempted to use them. If you have a problem doing this, you might give them to a friend or relative for safekeeping.

Sell unwanted items or gifts

Did you find yourself opening gifts from cousin Hank or great aunt Babs and thinking, “Wow! What am I ever going to do with this?” If you got gifts you don’t want make a list of them along with any items you have lying around the house you don’t need or use. Put the items on eBay or Craigslist and sell them. Be sure to do some research before listing them to make sure you price them fairly and realistically. Take some good quality photos and write strong, attention-getting headlines so you can sell those items as fast as possible. Heck, you might raise enough money in just a few days to pay off all your holiday debts.

man holding multiple credit cards

Sell gift cards you can’t use

There are online marketplaces such as Alula and where you can sell unwanted gift cards. Alula has kiosks where you could turn in those cards and immediately get a voucher you could redeem right in that store. Plastic Jungle used to buy gift cards but now offers three non-cash options. You could use it to turn your gift cards into Best Buy rewards points, exchange them for a CVS gift card or swap them for United Airlines miles. If you choose to sell your gift cards, be sure to read the fine print so you will understand how much money you will actually get back after any transaction and selling fees. How much can you expect to make selling a gift card? You’ll probably get anywhere from 65% to 85% of the card’s value.

Transfer your balances

Could you qualify for one of those 0% interest balance transfer cards? If so, you might transfer all your credit card balances to it and enjoy from six to 18 months’ interest free. This means all your payments would go towards reducing your balance instead of being gobbled up by interest charges. If you heavy up on your payments during that interest-free period, you could have your entire balance paid off before it expires. Be aware that some cards charge a balance transfer fee. Check this out before you sign up for that new card to avoid an unpleasant surprise.

Make your payments weekly

Don’t wait until you get your monthly credit card statement and then make just the minimum payment. Make your payoff plan a top priority by doing weekly payments. This will both reduce your interest expenses and help you get back onto a solid financial footing, as it should strengthen your commitment to become debt free. However, don’t start doing this until you’ve contacted the credit card company (companies) to make sure it will accept weekly payments.

Adjust your spending habits for three or more months

You will probably need to make some changes in your budget and scale back your spending for a few months so you’ll have more cash available to pay off those holiday debts. For example, you might cancel your health club membership or some other subscriptions you no longer need. You could tighten up on your grocery budget by using coupons or by buying items in bulk. You might be able to cut your cable bill by downgrading the number of channels you receive or maybe you could drop cable and stream your entertainment from Hulu, Netflix or some similar source. Whatever you decide to do be sure to keep track of how much money you’re saving. Add up that amount at the end of the month and then calculate how much it reduced your debt load as this can help keep you staying with your plan.

Use these tips to help pay off even more holiday debtSmiling woman hugging sack of groceries

If you’re really interested in paying off those holiday debts, here are some suggestions you might find helpful.

  • Focus on buying items at the grocery store that are on sale or are generic brands. These usually have the same quality as brand name items but can cost 40% to 50% less.
  • Buy and sell clothes at a consignment store. You will not only make money this way, you can often find very high quality clothing for pennies on the dollar.
  • Skip soft drinks when you’re eating out and stick with water. Also, skip dessert. Getting coffee, soft drinks or a dessert will increase the cost of that meal by 20% to 30%.
  • Trade services with friends. For example, you might be able to trade out handyman services for haircutting, photography for babysitting or pet sitting for housekeeping.
  • Give baked goods, service IOUs or other homemade gifts in place of expensive presents.
  • Boxed cereals can be very expensive. Switch to eggs, oatmeal or fruit for a better and more nutritional bang.
  • Call your utility companies and switch to a budget plan so that your expenses will be more consistent and predictable each month.
  • Don’t host or attend any in-home parties where you would be pressured to purchase things.
  • Brew your coffee at home instead of buying it at one of those drive-through stores or at work.
  • When you cook dinner, make extra servings on purpose so that you will have leftovers for lunch or for dinner the next day.
  • Pack your lunch. You don’t have to do this several times a week but if you do it regularly, it will definitely save you money.
  • Check out books and videos from your local library. You may not find the most recent movies but you should be able to find classic movies including those wonderful children’s’ films.

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