Paying Off Your Holiday Debt

Well, the holidays are over (or are well underway, at least; I realize that it’s only the fourth day of Christmas, for those of you who celebrate all twelve days, to say nothing of the other holidays that occur during this time of year). Hopefully, you’ve had a good holiday, with plenty of friends, family, and fun times. Now would seem to be the time to kick back, relax, and wait for the New Year to come.

But alas, that’s not always possible. There’s plenty that should be done before the year ends, or near the start of the year next year, at the latest. I’ve covered quite a few items on Monday (because I couldn’t let you go any longer before thinking about what you needed to do), but there’s an elephant in the room we still need to discuss: paying for those holiday presents.

Yup, Christmas Presents just like this

If you are like a great number of people in our modern society, there’s a decent chance that you went into debt (or added more debt to what you already had) buying presents for everyone (I know that I did). It happens, and I’m no position to scold you for it; now, though, is the time to plan how to deal with this added debt. We should start by:

1. Accessing the Damage: You need to know where you stand before you can figure out how to deal with it. Luckily, it’s easier than ever to find out where your finances stand nowadays: every credit card company allows you to check your balance online, as well as making payments. You probably kept track of how much you spent, of course, but it’s a good idea to go back over your statement to ensure that you are only being charged for spending you actually did, as well as making sure you know the total of what you owe.

2. Making a Plan: When you know what you owe, it’s time to figure how to eliminate it. There are a few different issues you will need to consider, from where to get the extra money to pay down the added debt (do you cut down your spending, or perhaps try to earn some money through a side job?) to which debt to tackle first. (There’s quite a bit of disagreement on the best order to handle debts; I tend to support trying to deal with the highest interest debt first, but paying down debt is good, regardless of the exact order you follow.)

3. Stick to that Plan: Once you know how you’re going to pay down your Christmas Present debt (or any debt, for that matter), it’s simply a matter of sticking to your plan. Alright, it’s not really that ‘simple’; if it were, there’d be a lot less trouble with debt in the world today. If you are going to stick with a plan, you need to make sure to reward yourself when you meet landmarks along your road to the ultimate goal of finishing off your debt. Try to find things that will bring you joy, but won’t cost much money; a picnic in the park or a (frugal) night out as you clear out your holiday debt will make it that much easier to remain motivated as you keep paying things down.

4. Plan for Next Year: Let’s be honest, there are some expenses, like car repairs or medical expenses, that we can’t see coming. Holiday expenses are NOT in that category, though; while you might not know exactly how much you will spend next year, you can probably come up with a ball-park figure about what you will need to keep everyone on your gift list happy (as well as providing food, decorations, and all the other holiday accouterments). Rather than charging all those expenses, why not put money aside throughout the year so you can pay for the holidays with your own cash (and enjoy the interest you accrue along the way, rather than pay interest to the credit card company)? By breaking the expected expense up and putting aside a smaller portion monthly or weekly (similar to an emergency fund), you can ensure that there will be plenty of holiday cheer, or at least, fewer holiday credit card bills.

Alright, that should be enough to get started on dealing with your holiday related credit card debt. Hopefully, next year you can have an even better holiday with less holiday debt as a result. Good luck, and enjoy the holiday time!

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