During the holiday season it's perfectly acceptable to be a complete spendthrift. Americans spend with reckless abandon from November to January and deal with debt several months afterwards. However, a massive debt trap is waiting for holiday spendthrifts that could be hard to crawl out of.
The first step to getting out of holiday debt is to take a proactive approach to settling any credit card debt. Not paying off the debt right away will lead to higher payments and will eventually impact the ability to own a home or even get a job, according to Black Enterprise magazine.
If it?s impossible to pay off credit card bills right away, contact creditors and try to persuade them to drop the interest rate for a few months or at the very least lower it. Once that has been done, try to determine how much of your income it's going to take to get out of debt. If income won't cover the debt, then it's time to consider getting part-time Employment until the debt is paid down, advises BE.
The alternative is to cut down on any unnecessary expenditures such as cable TV and long-distance phone calls. The best way to minimize spending money on long-distance phone calls is to get a pre-paid phone card. Additionally, luxury items such as manicures or pedicures should be eliminated.
After all of the auxiliary expenditures are eliminated a budget should be established. Sit down with a spouse and write down the salary, monthly expenses and debts. This will help the household keep track of finances. If a budget is created for the first three months it will allow the compulsive shopper in the family to see where cutbacks are needed in the future.
Implementing these steps also can take the stress out of Christmas 2006. Here are a few of Black Enterprise's steps for avoiding the debt trap next year:
- Shop in the off-season ?-- there are plenty of sales and bargains during Back-to-school sales or even during the summer.
- Open a Christmas club account -- figure out how much money you spent on Christmas and divide it by 52 (weeks in the year.) Then set aside that amount each week.
- Give practical gifts -- try to avoid buying your cousin that Harley-Davidson motorcycle he's always wanted. Unless, a few family members want to chip in for the gift.
Adhering to these steps will ensure that the holidays are not about financial distress and more about enjoying family and friends.