Despite the fact that 2008 was a tumultuous financial year and many people took a step back to curb their holiday spending, online holiday spending alone still amounted to about $25.5 billion dollars.
According to The Conference Board, over 27 percentage of American households spent over $500 for the holidays — it appears that many people may have extended or accumulated more onto their consumer debt through the holiday season.
If you’ve tackled on more debt during the holidays, what are some steps you should take?
Unfortunately there’s no easy ways to pay off debt, whether the debts were accumulated through a holiday season or through excessive spending, you’ll have to make some sacrifices to tackle the debt before they overwhelm you. Although you can always find ways to increase your income, the tips below on reducing expense and paying off debt has held up well since the creation of the universe. No joke.
Cut the non-essentials for a few weeks/months. Do you really need 500 different cable channels? Six different magazine and newspaper subscription? Start reducing your various monthly subscription fees, every little bit you save on expenses you can do without (temporarily or not), are additional dollars you can put towards the debt fighting war chest.
Reduce consumption on everything you can. If you frequent the expensive hair salon, consider scaling back from a couple of times per weeks/months to a handful times per month. Unplug unused electronics and chargers. Yes, its a common tip but I kid you not that I reduce my annual electricity bill by a few hundred after unplugging many gadgets that I don’t use — this is especially true in today’s world of always-on smart gadgets/electronics.
Free entertainment doesn’t mean boring entertainment. If you’re an avid movie watcher or book reader, your local library may be carrying many of the latest titles. In populated cities and regions across the country, many modern libraries have county-wide borrowing privileges, allowing you to select books from neighboring city libraries within the county. You’re already paying for these services via taxes, why not utilize them to help add to the expense reduction?
Tackle the highest interest rate credit card debt first. Assuming you used a credit card to pay for the holidays, pay the minimum for the lowest interest rate card, and use any other extra amount on the highest interest rate card. Upcoming tax refund? Unexpected windfall? Chug them toward the debt on the highest interest rate card.
Negotiate your credit card rates. Yes, even during difficult economic time where companies are raising interest rates, you can still ask them to maintain or lower your rates. This is especially easier when you have favorable credit worthiness and better or comparable offers from other credit card companies. Simply state that you have some low-interest balance transfer offers and ask your current credit card company if there’s anything they can do. You might not get an interest rate reduction, but a quick phone call is well worth it if you can knock even a few percentages off.
Finding ways to tackle the debt is all well and good, but being able to avoid the same situation again the following holiday season will be even better. What are some things you can do to you prevent another holiday spending binge?
Consider what’s more important for your family? At the end, the ability to provide shelter, food, and necessities should always outweigh excessive gifts under the tree.
It seems entirely appropriate to scale back on gift giving during tough economic times. The recession is in full force and family and friends should especially understand if you limit your gift giving.
I’ve personally told my other family members and friends that I’ll be only be giving gifts to my parents this prior year (which I’ve split with my sister). Oh, BillShrink Guy, you’re such a cheapskate, you might be saying. Well, no harm done if they are true friends and family! You can always suggest a day together with close ones in lieu of gifting. Trip to the local museum, picnic at the park may seem corny, but time spent together should always beat out materialistic things.
You can also consider setting expectation at appropriate level come next holiday season. Many experts agree that the hard times will not be over anytime soon, so why not let your family know that Christmas this year may not be the same? You don’t necessarily have to say “There will be no Christmas this year” but think of alternative ways your family can spend time together without the associated consumerism.
At the end, regardless of what the television advertisements may say during the days leading up to the next Black Friday, remember what’s truly important: our family and friends (don’t tell mine I said those things or my painstakingly-built cool persona will be destroyed!).