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Dealing with Holiday Debt

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Guest blogger Danielle Hoston: The real holiday hangover is credit card debt.

woman cutting a credit card with a pair of scissors

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.

next: Oldest Man in America Dies at 112
11 comments so far | Post a comment now
Anonymous December 29, 2008, 10:39 AM

Most people with cc debt can’t even tell you what they bought that put them in debt.

debt free December 29, 2008, 11:44 AM

So true. If we do not have the money for it right there and then, we don’t buy.

Leslie December 29, 2008, 12:26 PM

Great advice! Credit cards are evil!

Jerwayne December 29, 2008, 12:43 PM

Great blog. I agree with all you said.

Dana Mendez December 29, 2008, 3:55 PM

Great advice! I would also remind people with 0% interest rates from retail stores to mark their calendars for when that interest rate jumps from 0% to 20%! It can mean as much as a thousand dollars or more of back interest you will owe if you miss that deadline by even a day! If you have 0% interest for 2 years and are paying the $15 minimum on big purchases like appliances or electronics, it is unlikely you will be even close to paying it off in 2 years. Always remember to calculate the amortized payment yourself so you can pay it off in time and avoid paying an extra 20% for your purchases!

Larkspurs December 29, 2008, 6:19 PM

I’m so proud of you!!! You have endless talents and gifts. Happy Obama Years!! Julie

leo December 30, 2008, 12:14 AM

Great blog! I have a sticky debt of 2 grand I can’t rid of..My fault. But I’ll get there soon enough. Starting with all the tips I just got from this blog…thanks so much

Christine December 30, 2008, 2:02 AM

This is very useful info and I will definitely put it to good use. Thanks!

Lahdi December 30, 2008, 7:31 PM

This blog as always, is RIGHT ON! You owe it now own it!

cna January 6, 2009, 6:57 PM

I’ve got to get those Oreos out of my purse :)

tabletki na pryszcze April 3, 2011, 7:19 AM

Very interesting info, i’m waiting for more !!! Keep updating your website and you will have a lot o readers

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