For millions of Americans, the real holiday hangover hits when the credit card bill arrives. After springing for airline tickets, gifts for everyone from parents to friends to coworkers, a new outfit and some bottles of bubbly to ring in the New Year, few people can afford to pay off their full balance in January. In fact, a recent poll conducted by Consumer Reports found that about 12 million Americans had not paid off the previous year’s holiday shopping bills. Wow! Here are five tips to keep you from falling in the holiday debt trap again.
1. Combine Credit Card Balances
Instead of making monthly payments on a couple of cards, find a low-interest balance transfer credit card and consolidate your debt into one account. It’s much easier to tackle a single number for your debt rather than managing two, three or four cards. (Don’t cancel these other cards; keep them active with occasional charges as closing accounts can negatively impact your credit score).
2. Don’t Just Pay the Minimum
It has become a bad habit to just pay the minimum amount due on your credit card. Be aggressive about paying each month’s new balance down in full, as well as making a dent in the existing balance. By putting extra money towards your balance, you’ll avoid paying off long-term interest, which we all know adds the price of a bottle of wine on top of your $50 dinner, but you don’t get to drink it!
3. Re-Examine Everyday Bills
Take a look at your everyday bills, like those for your cell phone, utilities, entertainment, etc. to find ways to cut back on spending. For example, cut down on the number of minutes / text messages on your plan per month. Go out to dinner, but substitute your posh bistro for a great hole-in-the-wall, cheap-and-cheerful joint. Or, better yet, invite friends over instead of going out. Turn down the heat and grab your sweater. You’ll see the savings add up and you won’t feel you had to compromise much of anything.
4. Be Strategic
Don’t go to the mall for entertainment. Also, write a list before you go shopping – and stick to it. You need to put an end to the days when you’d go to the department store for socks and the next thing you know, you just had to get that suit on sale. Same goes for groceries – write a list and don’t go the grocery store hungry!
5. Log Your Success
One of the best (and most inspirational) ways to stay on the right path is to track the progress you’re making to eliminate debt. Write your starting balance on a piece of paper along with a timeline for whittling down your debt. Every time your debt decreases, write a line through the previous balance and write down the new one. Keep going until you finally reach $0.
This is a guest post provided by BillShrink.com. BillShrink is a free, personalized savings tool that helps you save money on your everyday bills.
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