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Living a Better Life 5 Steps for Dealing with Holiday Debt
As we discussed on the "Morning Show" Christian Radio Family Life Network!
If you spent so much money over the holidays that you're dreading opening your mailbox you just might have a problem. But, just like taking off those extra 5-10 pounds you may have gained, the best thing to do is deal with it promptly. Maybe we should title this column Holiday Debt Recovery! * * * So, you promised yourself you’d stay within your shopping budget. “This holiday will be different, I’m not going to overspend!” But then it happened. You got caught up in spirit of the holidays; the pretty decorations, the joyful music, the incredible food, and the thanksgivings for your own blessings that annual celebrations often inspire. ybe, you just wanted to be generous to your loved ones or other families in need, but ended up sharing a bit more (or maybe a lot more) than you could really afford. And, maybe, you even got caught up in the shopping frenzy of holiday bargains that were abundantly available, even though I warned you not to in my last column! And, unfortunately, hoping that the bills just won’t come in or that somehow they will get paid off over time could be risky; depending on how much you owe you could still be in the exact same boat a year from now, or even worse if you only make minimum payments. Not to mention the added sting of compounding interest. If you overspent during the holidays here are 5 steps to help you get back on track quickly… Step 1: Assess the Damage How much do you owe? $100.00, $1,000.00 or maybe $10,000.00? The first thing you need to do is gather your receipts or call your credit card company (or companies) to get find out exactly how much you owe. Just waiting for the bills to arrive in the mail could put you further behind; you will lose valuable planning time. Once you know the total amount you owe you’ll be able to make a plan to pay this holiday debt off, as quickly as possible. And how do you do that? Just as we have to do with the extra 5 or 10 pounds we may have gained from overeating during the holidays… by cutting back! Step 2: Temporary Cutbacks Make cut backs over the next few weeks or months, or however long it may take you to get caught up. Unless you just totally went crazy over the holidays you should be able to pay off your holiday debts pretty quickly—and not to spoil the party but, just think how nice it would be to not owe anything! Budgeting is truly a lot like dieting. It takes discipline and determination to do better, and to cut back when necessary. (Fortunately, budgeting is often a lot easier!) Here are a few ideas to get you started, make a list of everything you spend money on each week and you may be able to add some more of your own… Areas to cut back until your holiday debts are paid off: * Dining out (this includes DRIVE-THROUGHS!) * Pizza delivery * Prepackaged foods at the grocery store (and any expensive items at the grocery store) * Gourmet coffees * Vending machines snacks and sodas * Power bill (trim your electric or gas bill by adjusting your thermostat by 1-2 degrees) * New clothes and gifts * Travel * Car washes * Exercise equipment or gym fees (walking is free!) * Movies and sports events * Video rentals (get a free-trial month at Netflix!) * New furniture, bed & bath linens, appliances... (and anything else that might happen to be on SALE right now!) Step 3: Make a Plan My suggested plan is quite simple. Save as much money as you can and put it all towards your holiday debt. Figure up approximately how long it’s going to take to pay everything off so that you have a clear understanding of how long you need to keep your cutbacks in place. For example: If you owe $250.00 and can save about $100 a month with cutbacks, it will take you 2 and 1/2 months to pay off your debt. If you can save $150 a month, it will only take you about 6-7 weeks. (If you are in more than just holiday debt please be sure to get a copy of my book Dealing with Debt, it’s available free for all subscribers!) Step 4: Get it Over With Quickly Stick to your plan! Pay your holiday debt off as quickly as possible. Period. It may not sound very exciting right now; in fact, it might even be a little painful. But I promise you it will be worth it! Also, if you have the ability to make some extra money to pay off your holiday debt (maybe you even have some items you can sell on eBay), you may be able to pay off your debt in half the time! Step 5: Prepare for the Next Holiday As you reflect on the total amount of money you owe due to overspending during the holidays, consider how much better you would feel without that extra financial burden. Creating a holiday spending plan (budget) will really help. Create a holiday budget: Using our Holiday Spending Worksheet, figure the total amounts you spent during the last holiday and estimate how much money you will need for future holidays. Then, try to set a little money aside each month so you won’t need to go into debt. If you don’t already have a savings account, now would be a great time to open one! Then use our Holiday Gift Worksheet each year to reduce overspending on gifts, and the hundreds of free holiday tips we have available on the site. And, shop all throughout the year, starting in January—or as soon as you have your bills caught up. This will enable you to take more time to find the perfect gift for everyone on your list, spending just a small amount of money each month instead of all at once. You can also pick up some great end-of season clearances every 2-3 months! And remember, it’s the thoughtfulness behind the gift (store-bought or homemade) that counts, not the amount of money you spend! * * *
Copyright © 2005 by Michelle Jones, author of Frugal Family Recipes and Dealing with Debt. All rights reserved. Want more money-saving tips? Get a FREE Subscription to our monthly newsletter!
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