If you overspent over the holidays, you are not alone. Surveys show that more than one in three Americans racked up debt buying gifts, plane tickets and party supplies to celebrate this Christmas. After a long season of excess, the decorations are now gone, the wrapping paper thrown away and all that lingers is the massive credit card bill.
So, now what?
The last thing you want to do is just pay the minimum payment on your bill. In fact, when your statement comes, study the section that tells you how long it will take to pay off your balance by paying just the minimum payment. Depending on what you owe, it will be years and maybe decades.
Instead, you need to add up all that you owe and form a plan of attack.
- Dedicate yourself to paying off that debt so that it doesn’t snowball into a heaping amount of interest. Get your spouse to buy in to the notion that Christmas pay off needs to be the priority before other spending.
- Add up how much you actually owe.
- Form a plan of attack to pay it off fast. The longer it lingers on your card, the more you’ll pay in interest.
Well, that sounds easy, right?
It clearly isn’t as easy as 1,2,3. In fact, let’s take a closer look at how to form that plan of attack.
- Update your budget to reflect Christmas Debt as a new line item. Don’t have a budget? Now is the time to make one. You need a clear picture of how much money comes in, how much goes out and where it goes. Need help? Find links at the bottom of this article to help you get started.
- If your budget is tight, look for ways to cut costs or to make more money. Most households waste money somewhere. It could be through behavioral choices like eating out too much or letting impulse buys get out of control. It could be on big bills like car insurance. Research these expenses by requesting a new quote from your insurance agent or consider refinancing your home if you feel the mortgage payment is too high. Can’t cut costs? Look for a side hustle to help you bring in some extra bucks and knock out that debt quicker!
- Stay focused on the reward of knowing you accomplished this goal and that you are about to eliminate that debt.
Once you’ve paid off this Christmas, don’t stop there! Take all that money that you have been applying to your debt to save for next Christmas. Wouldn’t it feel amazing to pay cash for Christmas 2022 this year? Open a VCNB Passbook savings account and set up automatic transfers to guarantee you’ll save the money. When October rolls around and we open our VCNB Christmas Club again, be sure to sign up for this special savings account!
VCNB Resource Guide
Find useful tips and instructions for getting started with your budget and with finding ways to save money!
Finding Money To Save (Even When You Think You Can’t)