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How to Recover from your Holiday Debts

Holiday Debts

The Holiday season celebrates with friends and family over food and gifts. Often that means travel to see family. If you went beyond budget or did not make your savings goals going into December, and relied on credit to tide you over, there are steps you can take to manage your debt. It’s important because credit can be very costly, which will reduce your income for spending and saving. Furthermore, a good credit standing is important for future loans, like applying for a mortgage or renewing your mortgage.

Target expensive debt first

Your credit cards come with different interest charges. Review the terms to see which credit cards have the highest interest rate. Credit cards with low balance and high interest rates are good to pay off first. Do note that cards which are nearly maxed out with low interest rates will be less expensive to pay off gradually, but it may affect your credit rating, as rating agencies like to see credit cards at use around 20-30% the credit limit. Consider transferring balances from more expensive credit cards to cheaper ones, but again be careful about the credit limit and transfer charges.

Increase income

If you can pick up an extra shift at work or take on a part time job, increasing income is a great way to reduce debt. You can also find money in other ways, such as selling unused items around the house.

Contact your creditors

Before your debt escalates into collections, take initiative and speak to your credit card company’s representative. Ask to see if they can waive fees or lower rates. If you let them know your situation and show sincere interest in repaying your loans, credit card companies will see you as a customer who is cooperative and communicative.

Reduce spending

We’re left with many gifts, clothes, and new gadgets after Christmas, but spending continues into the new year. It is important to stick to your budget, or even adjust if necessary. For daily use items, consider switching temporarily to less expensive options (generic brands or cheaper alternatives). Instead of enrolling at the gym, find other ways to fit in exercise.

If you struggled with debt prior to the holidays, and the holiday spending is only a small portion of it, consider consolidating lines of debt. Consolidated debt is easier to manage. Exercise caution when consolidating debt, use reputable financial services, and be sure to research all your options.

At Kevin Thatcher & Associates Ltd. we offer free consultations to ensure that you can explore all of the options available to you and make informed decisions.

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