Advice on How to Recover From Holiday Debt
Yikes! You went a little overboard during the holiday season and you are now facing a string of credit accounts that demand payment NOW! We know it’s hard to resist a good bargain. Sure, it was Christmas but in the end the debt must still be paid. Here is some useful advice to help you get back on track and recover from holiday debt quickly and efficiently without ending up on the blacklist.
Don’t Ignore Your Debt
It might seem like the easiest way to deal with holiday debt is to pretend like it doesn’t exist. The truth is, it does exist and ignoring your debt will only make it worse. Consider this: each month you miss a payment, you’ll get charged more interest. Not only that, late payments will be reported to the credit bureaus, leading you to becoming blacklisted.
Assess the Damage
How much do you owe? R1000.00, R5,000.00 or maybe R10,000.00? The first thing you need to do is gather all your receipts or call your credit providers to find out exactly how much you owe. Once you know the total balance you’ll be able to make a plan to recover from holiday debt, as quickly as possible. And how do you do that? Just as we have to do with the extra 5 or 10 kilograms we may have gained from overeating during the holiday season… by cutting back!
Make Temporary Cutbacks
Make the cutbacks over the next few weeks or months, or however long it may take for you to catch up. Unless you went totally crazy over the holidays, you should be able to pay off and recover from your holiday debt pretty quickly. Areas to cut back to help you recover from holiday debt include dining out, avoiding pizza deliveries and extravagant foods at the grocery store, snack and soda vending machines, new clothes, weekends away, car washes, gym fees (walking is free!) and DVD rentals.
Create a Budget
Budgeting seems easy enough, but in practice it can be one of the hardest disciplines to follow. Budgeting is truly a lot like dieting; it takes discipline, determination and commitment (luckily, budgeting is often a lot easier!) One way to make sure you stick to your budget is to identify the areas where you have overspent and make adjustments in those areas. Given that, tackle your debt head on. Take a look at credit card bills, and focus on the cards that have the highest interest rates; budget to pay the debt on these cards first.
Hide Your Credit Cards
The best thing to do is to avoid using your credit cards. Period! Hide them, freeze them, get rid of them or leave them at home, and instead purchase items with cash or a debit card to easily track what you spend without incurring even more debt. Also, don’t sign up for an overdraft facility on debit cards, which allows for overdrawing on an account as this will result in higher fees, hence more debt.
Track Your Progress
One of the biggest motivators of success is success! Seeing your progress will definitely encourage you to keep paying down your debt. Create milestones for paying off your debt. For example, if you have R4, 000 to pay off, give yourself a big pat on the back each time you pay off R1, 000. Knowing that you’re making progress will help keep you optimistic and encouraged.
It’s not easy to recover from holiday debt. But if you stick to your plan and pay your holiday debt off as efficiently as possible you will recover from holiday debt quickly. Establishing better money habits takes organization and discipline so that you can make better sound financial choices in 2014 and beyond. It may not sound very exciting right now; in fact, it might even be a little depressing. But we promise you it will be even more depressing when you are blacklisted. It will all be worth it once you have paid all your debts off!