Guest blogger Danielle Hoston: The real holiday hangover is credit card debt.
Step 1: You owe it... now own it. In my personal opinion, people don't pay off their debts because they are not taking responsibility for really OWING them. The fact is, you signed on the dotted line to pay back this debt and you are only hurting yourself by not paying it back. There is good debt and there is bad debt. Credit card debt is bad debt. Pay it back and you help yourself get in line for the good debt.
Step 2: Stop using your cards! Every time you supplement your income by using your credit, you are digging yourself into a deeper financial grave. Here's a question: If you're trying to lose weight, do you carry a bag of Oreos in your purse?? NO! Put ALL of your credit cards away or hand them over to a loved one that you trust. Make sure you don't have them in your wallet or else that 5th pair of strappy black shoes will definitely find its way on your credit card bill next month.
Tip: Do NOT close any of your accounts. It can negatively affect your credit if you do.
Step 3: Trim your "budget fat." You already know this... now let's do it. Trim the extras (yes, we ALL have extras) from your monthly budget. If you already HAVE it, don't BUY it. If there is a CHEAPER way to do it, then DO it. If you don't NEED it, then CANCEL it. Directly apply those "budget-buster" savings to reducing your debt and your balances will thank you for it.
Step 4: Do NOT miss a payment and prioritize pay-down. Make minimum payments on all cards except one. Pay off the card with the lowest balance first -- not necessarily the one with the highest interest rate. You will pay it off quicker and feel good about yourself when you do. This increases the likelihood of paying off the next one. Also, zero balances on open credit lines help increase your credit score.
Step 5: Re-negotiate. In business, everything is negotiable. The same is true with your creditors. Interest rates are low all over the country. Creditors are concerned about collectability. There is room to negotiate in today's financial climate. Call and ask. It's not guaranteed but you may receive more pleasant news than you anticipated. It may just be the "hair from the dog that bit you" that you really need.
Do you have a "holiday hangover?" Tell us your story and how you're going to cure it.