Dealing with the post-holiday debt blues

By Andrew Housser

With the end of December on the horizon, it is time to face a
sobering reality. Creditors want to collect on the charges you made
while you were caught up in the holiday festivities.

Even the most budget-conscious consumer can get a little overzealous:
the deal that was too good to pass up, the unexpected last-minute gift
for a host and other unplanned expenses. If your credit card statement
indicates that you leaned more toward naughty than nice when it came to
spending, you can still resolve to start 2013 on good financial footing.
Follow this advice to rebound from holiday-induced debt.

Put the cards away

Charging more will only increase the time you'll need to pay off the
debt, which means more months of paying interest. Cut up your cards or
lock them away if need be, keeping just one -- preferably the one with
the lowest interest and no charges -- at hand for emergency use only.
Pay instead with cash or your bank debit card. (Be careful about closing
any account, however; just put cards away so you are not tempted to use
them.)

Pay on time

Never ignore your credit card payments. Pay as much as you can, even
if it is only the minimum amount due, and pay on time. Companies can
charge hefty penalty rates if you go more than 60 days without making a
payment. This means your 12.99 percent APR can skyrocket to 29.99
percent. That new rate will apply to your entire balance, not just new
purchases. Plus, your credit can be damaged. If you have not already
created a simple budget, it's time to do so -- and then incorporate
monthly credit card payments into the budget.

Negotiate

You may be able to negotiate lower interest rates if you are in good
standing with your credit issuer (no late payments, you haven't gone
over your credit limit) and your credit rating is good. The
decision-making power of customer service representatives is very
limited. Ask to speak to a supervisor and cite key points relevant to
your goal. For instance, you might stress that you have been a long-time
customer with no or few missed payments, and are currently in a
situation where you need time and flexibility to get your finances in
order.

Transfer to a lower-interest card

If you do not have any luck improving your rate with your existing
credit card company, you may want to transfer your charges to a
different creditor. The key is to not use the new or old card for
purchases and add more debt. Keep in mind that if you do not pay off the
full amount by the time your promotional deal ends, you will end up
paying a high interest on the balance transfer, plus the new purchases.
Instead of lowering your debt, you will have added to it.

Consolidate your debt

Maybe you were enticed by the discounts offered when you opened a
store credit line, but now you find yourself with three different cards
all charging high interest. Moving your debt to one card (preferably one
with a lower interest rate) will make it easier for you to manage
payments. Just make sure your credit balances do not rise above 50
percent of your available limits. If they do, your credit score will
take a hit.

Go on a spending freeze

You can try to make up for your holiday sins by being extra good at
the start of the new year. (Think of it as a debt diet.) Make a 30-day
agreement with yourself to not purchase anything for more than a certain
dollar amount (say $50). If you want something that costs more than
that, write down the item and wait 30 days to see if you still feel you
need it. Hopefully, you will discover that you really can live without
it.

Now is the time to start saving for the 2013 holiday season

Take a look at this year's total holiday spending. Divide that total
amount by 12 months. This is how much money you should set aside each
month for next year's holiday spending. Consider opening a Christmas
club account at your local bank or credit union or an online savings
account dedicated to holiday savings. You will not miss the money, and
the extra savings will make next year's holidays brighter.

Source: http://tuscaloosa.myfoxal.com/news/news/125656-dealing-post-holiday-debt-blues

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