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Digging Out of Holiday Debt
How to Survive This Year and Plan for Next Year
By Megan L. Fowler
If paying off your holiday debt doesn't feel as though it's that important and can be handled later in the year, consider doing this: "Go to www.ConsolidatedCredit.org, and check out the debt calculator," says Howard S. Dvorkin, founder of Consolidated Credit Counseling Services, Inc. in Ft. Lauderdale, Fla. "It will show you how much of your monthly payment will go to principal versus the interest, as well as how long it will take to pay off your debts. A $1,500 debt with an 18 percent interest rate could take you over 20 years to pay off if you only send in the minimum amount due. A minimum payment during the first year would be between $27 to $30 per month, and of that, between $18 and $20 would go toward the interest, leaving little to pay off your principal."
To save a little extra money to put toward your credit bills, Dvorkin suggests not to pay extra money on your mortgage, don't eat out twice a week and don't do the daily latte. "Until you get that debt paid off, make it the priority," he says.
"The last thing you want to do is find yourself in debt again this time next year," says Chris Viale, of Cambridge Credit Counseling Corp. in Agawam, Mass. Start setting aside money now. For example, saving $15 every week throughout the year in a special savings account yields nearly $750 by the end of the year, says David Chung from CreditXpert Inc.
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Re: Digging Out of Holiday Debt by eona33 on 01/22/2010 04:38AM
It's a shocking thing when we find out that our credit card doesn't have any more cash to give. Due to overspending, we give priorities to spend more money during holiday season. Likewise, holiday season gets people to use their credit cards. Hey – Black Friday does have some great deals, but if you use the plastic, or hadn't budgeted for it, those supposed savings become holiday debt. That's why I always budget for paying it off after the holidays – try cutting out Starbucks (I know, it's really hard and it kills me) and a few other things (no Red Lobster) until March, when I usually have it paid off. No cards, payday loans (the occasional emergency use does no harm), no nothing until March. That way, I pay off the gifts I gave and don't wind up with interest payments until next Christmas.