Try as we might to control holiday
spending, it often seems to get away from us. Come the new year, we open the
bills and lament the new load of debt we’ve accumulated.
But instead of wallowing, doing nothing
and letting the situation get worse — interest accrues, after all — now’s the
time to take steps to fix it.
Take
stock
Before you can pay down all your debt,
you need to know just how much there is. Round up all the statements from your
credit cards, charge cards and store cards. This might hurt, but from here
forward, as you start making payments, it will get better.
As part of the recovery process, it will
be useful to create a budget. The goal: change your spending habits to end up
with more money to pay down your debt. And every little bit helps. Pack your
lunch instead of buying it. Downgrade or outright cancel your cable TV. Drive
less. Look at everything and see where you can save.
Make
a plan
Daunting debt can be less scary with a
plan for attacking it. One strategy is to take a mathematical approach and pay off debts with the highest interest rate
first, and work your way down to the lowest. The primary target on your debt
“hit list” is the credit card that carries the worst interest rate, even if
that means making only minimum payments on the others.
It’s probably a good idea, too, to stay
away from post-holiday sales, as tempting as they may seem. It may also be time
to ask some hard questions. Was every purchase necessary? Are there any lessons
to be learned for future holiday seasons?
Explore
your options
If there’s little or no room to trim
spending, another option is to increase income. Can you work overtime? Any
part-time gigs you can pick up? Assets you can spare and sell off to help pay
down debt?
If you have good credit, another option
is to consolidate debt and transfer your various balances to a single account,
either a credit card or a personal loan, at an institution such as LA
Financial Credit Union. Here, instead of making several payments of varying
amounts with different rates and due dates, you combine your debts into one
account, often at a more favorable interest rate.
Online resources and tools, including
payoff calculators, can help you manage your debt. In addition, the Federal Trade Commission
offers ideas to help cope with debt, including information on how to select a
credit counselor.
The point is, all is not lost. You can
get through this. It starts with the desire, and then few small steps in the
right direction.
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