You may still be humming Christmas tunes or getting over your New Year's hangover, but in just a matter of weeks you'll be getting your credit card bills for the holidays.
If you already have money in the bank to pay them all off, then go curl up on the couch with a cup of hot cider and a great movie. For everyone else, now's the time to start thinking up a plan to pay as much as you can, if not all, of your credit card bills when they arrive.
Even if you have to get a little creative, or maybe even a little desperate, there are lots of benefits to doing everything you can possibly think of to pay off your holiday debts as soon as possible.
You'll avoid paying interest on all those purchases over the next few months. You'll be free of that guilty conscience that creeps up every time a statement arrives in the mail. You'll also have room in the budget to plan for the next round of holidays. (See the next article for more on that topic.)
So, where can you get the money for those credit card bills? Even if you've resigned yourself to paying off your balance over a couple of months, you may have more than you think once you start looking around.
- What can you live without this month? Forgo a few treats now and you'll squeeze some extra dollars out of your paycheck. Limit the pain this causes by setting a 30-day or 45-day limit. Then figure out what you can live without in the month of January. Stay away from those after-holiday sales, and cut down your spending on restaurants, movies, and clothing. With all the time you'll save not shopping, you can devote yourself to all your New Year's resolutions.
- Holiday returns and gifts. This may be a slightly crass tactic, but effective nonetheless. If you're certain you'll never wear that pink angora sweater your aunt sent, return it and devote the money to paying off your debt. Even gift cards can be converted to cash through many online trading sites that have popped up recently. If you're all thumbs, but you're sitting on a gift card to Home Depot, don't let it go to waste. Holiday checks from family members can also make a dent in the debt load.
- Sell your stuff. Start off the new year with a good housecleaning, then turn your unwanted stuff into cash. You can probably find a consignment store in your area for clothing and furniture that's in good condition. Consignment stores for baby and maternity goods seem to be everywhere. Consider scheduling a midwinter garage sale. If it's too cold to even think about standing outside with a cash box, try marketing some of your used items on eBay
(NASDAQ:EBAY)or other online auction sites.
- Tap your savings. The interest rates on savings accounts have been going up, even as high as 5% in some cases, but you're probably paying more than that in interest on your credit card purchases. It can be emotionally difficult to drain your piggy bank to pay off consumer debt, but it's in your financial favor. Wouldn't you rather spend the rest of the year paying yourself back, instead of the credit card company?
- Earn more. Think about ways you might be able to put a few extra bucks in your pocket this month. Once you start looking around, you might find more opportunities than you expected. Volunteer for overtime this month, or shovel snow around the neighborhood, or take on a little babysitting on weekends. Even if you earn just a little bit more, the dent you'll make in your debt will be worth the extra effort.
If your holiday spending got seriously out of control, or if your credit balances had been rising long before the holidays, you'll need to make a serious plan to dig out of debt. Start with the list above, then head to the Credit Center for even more ideas. Winter is the perfect time to learn about snowballs -- not the kind you pelted at your kid brother, but the kind that helps you develop a strategy to attack your debt and pay it down as fast as possible. Make it your mission to get out of debt this year, and tap into the community at the Credit Cards and Consumer Debt discussion board to help you stick to your resolution.
- What's So Bad About Credit Card Debt?
- The Credit Card Trap
- $24 Billion to Credit Card Companies ... For What?
For even more personal finance tips, try our Motley Fool Green Light newsletter. This past issue included guidelines on prioritizing money tasks, which could save both money and headache. The holidays may be over, but you can still treat yourself with a free 30-day trial.