How to Manage Your Holiday Debt

Before the holidays there was endless advice about setting a budget and sticking to a shopping list. Those who ignored the wisdom shared by experts will be in for a shock when credit card and bank statements arrive in the mail.

According to a Consumer Reports poll, six percent of us are still paying off holiday debts from 2010. That means any new purchases racked up over the past holiday season will inflate those interest charges and make paying down the old and new balances more difficult and expensive.



If the bottom line on your bills is looking ugly, it's time to get a financial-management makeover. Consider these tips for balancing your holiday debt:

1. Double and Triple Up

Multiply your credit card minimum payments two or three times to reduce the amount of interest you'll end up paying. Merely meeting the minimum means you'll never see bottom.

2. Now's the Time to Negotiate

Talk to your credit card company about negotiating a better rate on interest, fees and other expenses. If your interest rate is above 15 percent and they won't negotiate, it may be time to transfer much of the balance to a lower-cost card. Just make sure you pay off the debt before the interest rate climbs again.

3. Go On a No-spend Diet

Stick those credit cards in the freezer, if you have to, but do what it takes to avoid impulse shopping sprees. Better yet, give them to a trusted friend or family member for safekeeping.

4. Get Couponing

Using coupons for necessary purchases not only saves you money, but the practice helps you make more educated purchasing decisions. You can easily find online and printable coupons for thousands of stores.

5. Stick to Cash

There's something about parting with greenbacks that makes us less likely to spend. Keep a budgeted amount on hand and stay away from the cards. Using the envelope system is especially helpful in tracking your cash spending while working toward financial goals.

6. Cut Back on Luxuries

You've had your fun during the holidays; now it's time to get serious. Cut out the restaurants, nail salon and triple shot mocha latte until the bills are under control. Of course, too strict of an economic diet is as easy to break as a weight-loss regimen. So figure in an occasional, small splurge to keep you going.

7. Set Small Goals

Don't try to do everything at once. If paying off credit cards in three months means going hungry, you're biting off more than you can chew. Set smaller, obtainable goals and you'll appreciate the final results more. For those with multiple credit cards with high balances, try paying down one card at a time to feel that sense of accomplishment needed to push on to the next goal.

8. Meet With a Financial Planner

If you're barely treading financial water, it's time to get some assistance. A professional financial planner can help you establish a reasonable plan that won't leave you paying off debts until next Christmas. You can find a qualified guide through the Certified Financial Planner Board of Standards website or you might check for non-profit assistance.