Get Out of Holiday Debt in the New Year
Most adults exceed their holiday budget in the month of December. Luckily, with the turn of the year, you can make resolutions not just to diet but to recover from your debts as well. In order to do so effectively, however, you must plan long-term and with the intention of permanently curbing superfluous spending.
After assessing your holiday shopping statements, consider opening a new credit account with interest-free balance transfers. In the month of January, creditors typically promote 12- to 18-month 0% APR financing, which speaks directly to those who seek a debt management plan without incurring hefty one-time charges. The hiccup in this plan, however, is that credit card companies rarely allow customers to do this internally, so you may need to shop around for deals in the New Year.
Once you’ve transferred your balances, refrain from using your debt-free credit cards. Since all of your holiday debts remain in an interest-free environment, the last thing you want to do is charge more to a card that does increase monthly. For the first few months of 2014, switch to cash or debit transactions.
In order to tackle holiday debt quickly, make the New Year a time of saving by cutting costs wherever possible. For instance, when grocery shopping, download fliers for all grocers in the area and target deals specific to your list. Little cost cuts like this add up after a few weeks, ultimately helping your situation. Similarly, shop online whenever convenient to avoid retail inflation in-store. Although this may require a credit card — the one thing you’ve vowed never to use again — this is one exception you can make so long as you pay off the balance immediately.
Other purchases that you may drop from your weekly allowance include coffee, alcohol, premium cable channels, cigarettes, restaurants, premium gym memberships, and magazine subscriptions. You will surprise yourself how quickly these trivial purchases accumulate into one large unnecessary expense. While a night out is absolutely fine, limit your splurging and plan ahead for such times.
As you start to reduce your holiday debt, return to your financial institution and ask if there is room for more savings. Some of your accounts may be eligible for lowered interest rates. Depending on the bank, you may even spend hundreds a year maintaining your chequings account — even more with overdraft enabled. Similarly, the amortization period on your mortgage may be adjusted just like the conditions of a line of credit. Asking never hurts; it’s a big part of staying on top of your finances.