February is arguably one of the most expensive months in a year. After all, you have to rush and book the fanciest candlelight dinner or buy that newly launched iPhone for your beloved. Regardless of the occasion, with the access to a credit card and the tempting schemes offered during the holiday season, who can resist?
While some of us are still reeling in from post-Valentines debt, others fear the impending expenses of upcoming holiday seasons. Especially while deciding their budget for this year! You could easily tank your monthly budget during festive seasons.
Let’s Begin with the Recovery
The good news is, that there are a few ways you can recover from holiday debt. You may want to keep this information handy for the rest of the year!
Review Your Purchases
The first step to recovery is simple. Just sit down and gather information on all the debts you owe. You can make a list based on the type of debt (credit card, or Buy Now, Pay Later schemes). Assess your credit card statement to ensure that you’re being charged correctly with no errors.
Your Payment Strategy
Try to start paying back credit cards with the highest interest rate, in order of priority. Or, to see quicker progress, you can pay the smaller debts first. Whenever you can afford or manage it, pay back more than the minimum amount due.
However, no matter what you do, don’t miss out on paying the monthly instalments. This could seriously affect your credit score.
End Impulsive Purchases
While you’re busy paying off the debt acquired during the holiday season, don’t indulge in frivolous spending. Consider yourself on a strict financial diet. Instead, you need to re-evaluate your expenses and try to free up your money wherever possible to re-direct it towards paying off your debts.
You can start by switching to cheaper alternatives, renting instead of purchasing, or using coupons to avail of affordable bargains.
If you’re unable to pay off your debt, you can try to opt for consolidation. This will essentially combine all your debt into one payment, which can be settled through a loan or balance transfer card. By using this approach, your debt will be easier to manage.
However, bear in mind, you need to have a good or excellent credit score to qualify for such loans.
Reach Out to Your Creditors
You can try to negotiate with your credit card company for better interest rates. This in turn will help you pay off your debt quicker, without tarnishing your credit score with delayed payments. Additionally, you could request for better terms on the card.
But, by the time you recover from your previous holiday credit card debt, a new occasion or festival might be around the corner. Don’t worry, though. You can still engage in the festivities and make memories with your loved ones.
Tips to Prevent Holiday Credit Card Debt
Just follow these simple tips to avoid falling into any vicious debt cycles, or to lower the burden of the debt this time around.
- Create a list of gifts/items you need to buy and fit them within a sustainable budget.
- If your credit score is on the lower spectrum, avoid making any credit card purchases.
- Try to begin shopping early for all the occasions beforehand to spread out the expenses.
- Don’t buy expensive items if you can’t pay them off without any major sacrifices.
- Pre-plan the gifts, or items, and watch out for any sales or discounts to get a great deal.
- Most importantly, start saving for the next holiday shopping spree beforehand.
This year 2022, keep your loved ones happy, and your credit score happier!