The parties are over. The presents are unwrapped. The decorations are safely stored for another year. The holiday season is over but, unfortunately, for many people it lingers thanks to holiday debt.
Many Canadians get caught up in the holiday spirit of gifts, parties and travel to see family. Even those who set a budget can overspend when it is so easy to whip out a credit card.
When those credit card bills arrive in January, take steps to pay the debt quickly and make a plan to stay out of debt next season.
Create a budget
Write down all the money you earn and all of your expenses. You need to know how much money you have to put toward your debt. The Home Budget Planner can help.
Outline a payment plan
Make a list of all the money you owe. You'll need this information to identify how much of your budget you will have to set aside for debt repayment. For each credit card or debt include the amount owed, the interest rate, the minimum payment amount and the date the payment is due.
Pay off your high interest debt first
Identify the debt with the highest interest rate. Make the monthly minimum payments to all of your other debts and use the rest of your debt payment budget on the high interest debt. Do that every month until the first debt is paid. Then move to the debt with the next highest interest rate and repeat the process.
Transfer your high interest debt
Chances are you used a credit card to make your holiday purchases. Consider transferring that debt to a lower interest product such as a line of credit or other credit options. If you do this it's important to stop using your credit cards.
Talk to a financial advisor
If you're not sure where to begin, a financial advisor can help you set your priorities and create a plan.
Plan for the next year
When making your budget, include savings for the upcoming holiday season. Each month put a little money into a saving account. When it's time to start spending for the holidays, leave your credit cards at home and use only the money you have saved.
Is your post-holiday debt only part of your overall debt problem? Perhaps it's time to create a debt reduction strategy.