The Holidays are Over! Now What?

The holidays are now behind us, and if you are anything like me, you may find yourself with a little more debt than you anticipated from shopping during November and December. Vowing to do better this holiday season, I spent time reviewing my options and planning. Here are some things for you to contemplate.

First, don’t let credit card debt linger by just making the minimum payments each month. Remember that credit card interest is compounded, which simply means that interest is added to your balance. If you fail to pay the balance in full each month, interest is added to your balance at the end of the next month. In essence, you pay interest on interest, and the item you purchased on sale no longer seems to be such a bargain.

Should you find yourself with too many credit card balances, debt consolidation may be beneficial. Be sure to do your homework, and consider your credit score, ability to make the new payments, and the impact on your budget. Other options to pay down debt include concentrating on paying off credit card balances that have the largest interest rates first. To determine what is best for you, make a list of all your credit cards, outstanding balances, and interest rates. Eliminating the costliest debt first may free up funds to add to your savings and get you back on the path to financial freedom.

Next, begin preparing now for your holiday spending at the end of the year. One option available to you is to open a Christmas club account. Christmas club accounts allow for savings with no minimum balance requirements or fees. The savings become available to account holders prior to the holiday season, just in time for shopping. Popular In the early 1960s and 70s, these types of accounts are still available at some community banks, credit unions, and with select employers. If you are unable to establish a Christmas club account, try saving on your own. The same amount of money that you would have deposited into the Christmas club account, you can add to a piggy bank or secret stash at home.