Tips for Paying Off 2012 Holiday Debt

If you didn’t pay cash during the past Christmas season, your credit card bills from the 2012 holiday season have just started hitting your mailboxes. Are you feeling the pinch from buying grandma that must have sweater for Christmas?

According to the National Retail Federation, holiday sales increased by 3.0% to $579.8 billion with the average American consumer’s budget for holiday gifts ringing in at $672, up from $649 in 2011.  It will take the average American until May to pay off Christmas bills. That leaves you only 7 months before you begin charging Christmas 2013’s gifts to your cards again.

If you do not want to wait until May to watch those charges drop off your credit cards, begin implementing my post holiday debt reduction plan now!

Stop Charging

If you continue to use your credit card, not only will it take you longer to get rid of the holiday debt, but, you will also pay more interest to do so. Stop adding to the debt by paying cash when you can and by delaying purchases.

Make Some Quick Cash

Is there anything sitting around the house that someone else might want? Get thee to Craigslist, eBay or any other site where you can sell those goods. Remember the old adage, one man’s junk is another man’s treasure. Someone is willing to pay for your junk.

Negotiate A Lower Interest Rate

If you’ve been a great customer and you have decent credit, now is the time to cash in. Call your credit card issuer and ask if they have a promotional or lower interest rate that you may qualify for. If approved, you’ll save money in interest fees lowering the overall amount that you will have to repay.

Use Your Tax Refund

Are you expecting a tax refund? File your taxes early and use that cash to repay your credit card. In 2012, the average refund was about $2,700. This year the IRS expects to pay out $230 billion in tax refund with $140 billions returned to consumers by February 15. Instead of splurging on yourself, pay your credit card bill.

The next time that Christmas rolls around (and this tends to happen every year), be a smart shopper by planning and saving ahead of time. Your wallet will thank you for it.


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  1. I prefer to do the opposite. I have a Christmas fund that is literally in a mason jar. I have budgeted to put a certain amount away every month without fail. I also throw in extra money that I have from time to time and even loose change. I only buy what I have money for. It worked out very well this year… I was able to buy gifts for the people I wanted to and have none of the credit card stress!

    • I rarely use cash, so instead I just save cash back rewards that I have earned through the year and redeem in January. It usually covers the majority of my Christmas spending.

    • I’m with you on putting money away ahead of time, but physically having it in the house would never work for this household…husband is continually dipping into the change jar! If we don’t see it and if it’s not in the house, it doesn’t get spent. So I set up a separate earmarked ING account and automatically transfer a bit each week into the account. Over the course of the year, it adds up to more than enough to cover both birthday and Christmas gifts.

  2. Another thought: If you’re getting a paycheck in the U.S., you just took a hit when the temporary payroll tax cut ended. You can get some of that money back and maybe more by revisiting your W-4. You don’t want to have a big tax bill April 2014 so don’t overdo it, but if you’ve got a substantial refund coming this year, scale back your withholding by submitting a revised W-4 to the payroll department. Of course the key is to then devote the extra take home pay to debt pay off, not spending!

  3. I also agree with the benefits of putting aside funds before time for whatever you know you’ll need (whether that be Christmas or anything else for that matter). It does require discipline of course but the more often it’s done, the greater the discipline becomes.

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