Sense & Centsibility Blog

Here's the Cure for Your Holiday Shopping Hangover

Person with Santa hatChristmas was yesterday so you may be wondering: why do I need to think about this right now? It's because debt is more urgent than you may realize.

If you used credit cards for Christmas presents or other holiday expenses and can't pay them off in full right away, you may end up paying much more than the original price (because of interest charges).

Not to mention, it could take years to pay off depending on your balance. To see how long it will take you and how much you'll pay, use the scrooge-o-meter. 

Regardless what your results were from the scrooge-o-meter, the good news is you can change the results. Now that you know, it's time to take action.

Stop Charging

It's time to take the plunge and promise to yourself that you won't make any more purchases on your credit cards unless you can pay it off the charge right away. If you're tempted to use credit for more than you can afford, cut up your card(s) to take away that temptation.

Create a Realistic Budget

Review your income and expenses to see where your money goes. Be as accurate as possible, remembering to include periodic expenses such as annual/semi-annual insurance premiums, property taxes, vehicle tabs, and holiday expenses. If you determine that you're spending more money than you take in each month, cut spending where possible. It can also be helpful to temporarily go into crisis budgeting mode until you balance your budget.

Want some help setting up your budget? Call LSS at 888.577.2227 to schedule a free and confidential financial counseling session or get started online right now.

Pay Off Your Debt Faster

You'll notice on your credit card statement how long it will take to pay off your balance with the minimum payment versus a slightly higher payment.

The other eye opening information you'll see is the total amount you’d end up paying in both cases. So the best way to pay off debt faster and save money interest charges is to pay more whenever possible. Check into the Power Pay method for more information.

Look Into Debt Consolidation/DMP

LSS offers debt consolidation in the form of a DMP, a simple and faster way to pay off your credit cards. Regardless of how many creditors you have, you make one monthly payment to us and we send your payments to your creditors for you.

The Debt Management Plan helps you pay off your debt faster, typically with lower interest rates. Plus, there is never a penalty for paying more; not to mention you get to choose toward which creditor you want any extra payments to go.

On-time payments and decreasing debt balances will also help improve your credit score. Also, because of the reduced pay off time and typically reduced interest rates, people save a lot of money with this method.

Start Saving More

Building up savings is the best way to be prepared for an unexpected expense... and actually expenses you know will be coming up. It's important to find a balance between paying your bills, making credit card payments, and saving at the same time.

Because if you paid off all your debt and then you had to bring your dog to the emergency vet, how would you pay for it?

Once you're out of crisis mode, use the budget you created to determine how much you can set aside into savings. Then, set up an automatic deposit into savings monthly or every pay period.

Don't worry if you can't contribute hundreds of dollars a month right away. Start small and increase as you are able. If you get a tax refund, holiday bonus, or are expecting another type of cash windfall, use part of it to pay off debt and part of it for savings.

Get Support From Friends and Family

Let your friends and family know that you’re trying to cut costs, stick to a budget, and build up savings. That way you won’t feel pressured to give gifts, go out for coffee or dinner, or other things that cost money and aren't a priority. It's always easier to achieve your goals when you have support.

Plan for the 2018 Holiday Season Early

Don't let yourself fall into the same vicious cycle next year. This may be the hardest part, but it’s the most crucial to avoid getting into more debt. If you're working on paying off debt and building savings, be creative with gifts instead of spending so much money. Get your family on board, too, because I guarantee that no one that cares about you wants you to go into debt so they can get a present.

Avoiding dealing with your finances will only make it tougher and more stressful on you. So don't wait...take action today to feel better and regain control of your finances.

Call LSS Financial Counseling at 888.577.2227 to get back on the road to financial stability. Our Financial Counselors will empower you to pay off your debt and achieve your financial goals. Click to GET STARTED with your free online financial counseling session.

Author Elaina Johannessen is a Program Director with LSS.