The amount of money that Americans spend every holiday is pretty staggering. According to statistics on spending in the retail & food sector, sales increased 3.3% from 2015 to $5.5 Trillion in 2016. It’s no surprise that many Americans find themselves in post-holiday debt.
If you’re one of those people who end up overspending during holidays and find yourself in debt every post-holiday period, you need to take some drastic steps. Here are tips to help you get rid of holiday debt.
Review Your Financial Situation
You cannot get rid of debt without having a clear picture of your financial position. Start by compiling all receipts and documents related to your holiday expenses. Separate everything into specific categories so that you can know exactly how much you’re spending in each.
Your goal here is to get a clear understanding of what you’ve been spending on during holidays and even afterward so that you can cut back on expenses that will help you pay off your holiday debt.
Plan How You’ll Pay the Debt
There is no magic to paying off holiday debt. According to Fortunate Investor, a website that offers tips on how to reduce debt, you have three options:
- Reduce your expenses in the post-holiday months
- Pay off your credit card purchases
- Develop a savings culture
Write down all debt amounts you owe and the interest rates so you can plan how to reduce them. Create a holiday debt pay off deadline and stick with it, focus on the higher-interest rate debts first and consider paying more than the minimum to clear the debt faster.
Sell What You Don’t Need or Use
It’s no surprise that many people buy things on holidays that they don’t use or even need. Most of these items either end up in the garage or as expensive giveaways. According to Market Watch, 6 out of 10 Americans overspend on unnecessary things they can’t even afford.
Check through your closet and storage spaces to look for those unnecessary gifts and items you bought during the holiday and sell them. It might seem unorthodox, but you can easily pay off your holiday debt by selling off items that you’re probably not going to use.
Have a Practical Spending Plan
Your holiday debt pay off plan will only work if you cut back on your spending for the next few months. You can use a budget planner, a simple spreadsheet to track daily expenses or a simple free budget app. These will help you track your income and expenses more accurately.
Carefully monitor how much you’re spending on dining out, clothes, luxuries and miscellaneous expenses that you can cut to pay off your debt.
Cut Back on Credit Card Use
According to financial experts, credit card debt is a huge problem for many Americans. The ability to conveniently shop and pay the balance later has led to many people living in a cycle of debt, especially after spending on holidays.
To regain your financial footing, stop new charges on your credit card or at least cut back on how you use your credit card. There’s no point in working so hard to pay off your debt and yet continue piling up more debt on top. Be mindful of what you’re spending your money on.
The Bottom Line
The next holiday will come, and you will spend as usual but don’t fall into the same trap of dealing with post-holiday debt. It’s always best to plan early for holiday expenses. Start saving for those obvious holiday expenses, be a smart shopper and have a fallback plan.