Racking up credit card debt over the holidays was simply unavoidable with the coronavirus pandemic. Millions of Americans have lost access to some form of income and relied upon creditors to make this season seem as normal as possible for their families. Now that the seasonal magic is waning, it would be a great time to put together a plan to pay off that holiday debt as quickly as possible.
According to the National Retail Federation, the average American was expected to spend 998-dollars on Christmas. This spend includes presents, decorations, food, and other holiday expenses. The 2020 average is actually 50-dollars lower than it was in 2019 due to the pandemic. Whether spending is down or not, many consumers chose to put some or all of that budget on their credit cards.
If you were one of them, you don’t have to let a holiday spending hangover ruin the new year. Here are some tips to deal with that holiday debt load, so you can look forward to a less stressful year ahead.
Tally it up. Make a master list of all the debt you accumulated over the holiday season. Itemize your credit card statements to calculate how much you ended up spending on gifts, décor, food, and other holiday-related expenses. Knowing what this figure is can help you set some realistic goals for paying it off. It can also give you a better idea of how much you typically spend during the holiday season and how much to possibly set aside for future holiday seasons to avoid credit card debt altogether.
Put a halt on credit card spending. Make sure family members, who share credit card accounts, are aware of the current debt load and let them know you’re working toward becoming debt-free this year. This means everyone has to stop using credit cards for usual day-to-day purchases. Set some limits on credit card spending for all account holders, and check your credit card statements regularly. Remember to make more than the minimum payment each month to make a dent in your balance.
Tap into another income stream. This is easier said than done, but if you’re highly motivated to pay off that holiday debt as quickly as possible, you could use another source of income to get rid of debt in one fell swoop. Consider taking on a part-time job on weekends or turning a hobby into a side business. You can even sell some used items through apps, like LetGo or Mercari! Get creative, and you’ll be surprised by how quickly you can generate extra income quickly.
Pay off debt with bonus money. If your holiday bonus check just came in or you are filing your taxes early and getting a refund, you might want to consider using these extra funds to pay off your holiday credit card debt. Additionally, many Americans qualified for the 600-dollar stimulus checks released beginning on New Year’s Day. A portion of this money can be used to help you relieve your debt. Whatever you do, just don’t carry this burden into the next holiday season and repeat the whole cycle.
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