Credit Card Debt Guide

Credit Cards Out of Control

December has passed up by. The holiday season has come and gone, and you have bought gifts for all your family and friends.

Shortly comes judgment day when you get the dreaded credit card statement, and you face the shock. You have made many more purchases than you ever intended. Nevertheless the stores were awash in bargains, and the purchases just somehow happened.

You know the credit card companies are smiling upon you. But you don’t have enough in your savings to smile back. Now you are facing a hefty debt and it’s proving to be quite a task to pay it off.

Initial Considerations

America shops with plastic during the holiday season and postpones the sobering consideration that after all the gift unwrapping and family gatherings, there is still a financial reality at the end of the line. So what do you do when January’s blustery bill comes due?

You can, of course, pursue some form of debt counseling, seeking out an established financial expert that can provide financial assistance if your debt seems insurmountable. However, there are still wise options at your disposal which don’t require help from anyone else.

First if you are deep in debt, don’t charge anymore. Perhaps that’s painfully obvious at this point. Nevertheless, we need reminders to break bad habits. Don’t do it! Instead pay with cash. A cash-deprived wallet has a way of holding spending in check.

Plan for the Holiday Season Now

Now let’s return to the pre-December months. You feel some level of obligation to provide gifts to loved ones during the holiday season - which, when you think about it is an odd tradition in the first place. Nevertheless, you do.

Then, don’t wait for the season to start saving. Know your budget and what you can afford to set aside each month for holiday spending; then multiply that by the number of months until you actually begin making purchases.

If, for example, you begin saving in March, you have 9 months to go. Say you plan to spend $2000 for gifts. Then divide the amount by 9 months. This makes it a bit more than $200 a month that you need to be able to set aside. For many, this is affordable each month.

And when you begin saving every month, the total builds to a sizable amount by the time it is used. This is a much wiser approach than spending those sums throughout the year and then charging it all (again) at the end.

Be Honest with Yourself

If it takes more than a year to pay off the previous year’s balance, then you don’t have the funds to shop this coming holiday season. As a rule of thumb, if more than 20% of your salary is being used to pay back your debts, you are in significant financial trouble.

Be honest about it. Then avoid using your card for the current year and find inexpensive, more creative means of expressing your affection to loved ones. Or at least limit yourself to cash available in your savings only. This will save your finances - and perhaps your sanity - from insurmountable debts in the coming year.

Spending guidelines during the holiday season are really a microcosm for handling all financial decisions - plan ahead.

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