“It’s the most wonderful time of the year,” croons the classic Christmas song. For many people, though, the joys of the holiday season can be marred by the stress of looming holiday bills. If you are in the position of worrying about the cost of the holidays this year, and wondering how to pay off your 2010 bills, here are some simple tips to help you to manage your holiday debt.
Create Less Debt
This is the most obvious tip, but also the most effective. The less debt that you create, the less that you will have to pay off. It can be tempting to spend a fortune over the holidays on gifts, decorations, food, etc. However, it really is possible to have a cheaper Christmas. Set yourself a realistic budget and stick to it.
Pay Attention to Interest Rates
If you have holiday debts, try to make sure that your debts have the lowest possible interest rates. Some loans, credit cards, and store accounts have extremely high interest rates. If you have a high interest rate, your holiday debt is growing very quickly. Remember as well that interest is often accumulated on the total owed–not the amount you borrowed, so after a few months you could be paying interest on debt created by interest. Try to consolidate your debt to a low interest rate.
Set a Schedule
Don’t assume that your holiday debt will pay itself off, or that paying off your debt will be easy. Set a realistic schedule and stick to it. Budget how much you will need to pay each month to pay for your holiday spending. Make this a part of your household’s expenses and don’t be tempted to spend the money on something else.
The faster that you pay off a holiday debt, the less time that it has to accrue interest. Also, late fees can be very expensive. Just paying a day or two late can significantly increase the amount that you’re spending to pay off your bill. Pay attention to payment dates and be prompt in your payments.
Get Extra Income
If you have a lot of holiday debts, then it’s probably because you didn’t have enough money for the holidays. If this is the case, then it is unlikely that you will suddenly be financially better off after the holidays. Consider looking for an additional source of income to pay off your holiday debt. This could be taking a part-time job, doing some work from home (selling things on-line, baby sitting or writing, for example), or another use of your skills. Use this extra income just to pay off your holiday debt.