by Christine Luken
My neighborhood is blanketed with several inches of snow, which arrived overnight. My husband isn’t looking forward to shoveling the driveway and digging us out. Fortunately, unlike many of our friends and neighbors, we won’t have to dig ourselves out of Christmas debt because all of our gifts that we bought were with cash. Maybe you’re not so lucky. What do you do if you woke up the day after Christmas with a sinking feeling of regret, knowing the credit card bills are going to start rolling in? First of all, don’t beat yourself up! It’s time to take concrete steps to tackle your debt and ensure this doesn’t happen again next year.
Put your credit cards on ice
Literally! Take all of your credit cards out of your purse or wallet and put them in a bowl. Fill the bowl with water and put it in the freezer. Even better – close your accounts and cut up those cards! You can’t get out of the hole you’re in by digging out the bottom. The first step to getting out of debt is to STOP charging!
Commit to cash
Spending cash hurts. It makes you think twice about whether or not you really need that item you are about to buy. Studies have shown that people spend 12 – 18% more when shopping with credit cards than with cash. Physiologically, spending with cash actually registers as pain in the human brain. Using a debit card is okay, but it doesn’t hurt nearly as much as cash. I recommend that people use cash for categories they have a tendency to overspend on, such as groceries, dining out, clothes, and entertainment.
Make a battle plan
Financial guru, Dave Ramsey, likes to say, “You can wander into debt, but honey, you can’t wander out!” You need to declare war against your debt, get fired up, and make a battle plan. The best plan for attacking your debt is known as the “Debt Snowball.” List out your debts from smallest to largest. Make minimum payments on all of your debts, except for the smallest one on the list. “Attack” that small debt with as much money as you can find until it is eliminated. Once you have crossed that one off the list as paid-in-full, do the same thing with the next smallest debt. These quick victories will give your family a taste of success and motivation to keep on fighting for your financial freedom. It’s also important to create a budget and stick to it.
Sell some stuff
Most of us have stuff cluttering up our homes that we don’t use. Old cell phones, tablets and laptops sell remarkably well. Time to sell them on E-bay or Craigslist! Take the money you make on your listings and pay it on your smallest debt. You might be surprised what you make selling “junk” that is just taking up space.
If you are not already using coupons, consider doing so. You don’t have to take it to extremes and turn your basement into a mini-grocery store. I’m an advocate of “Practical Couponing” – spending a few hours a week couponing and searching for deals to save several hundred dollars a month. In 2012, I saved my family $5,900 by using coupons, rebates, and meal planning. Not too shabby! Next time you go to purchase something, ask yourself if you can find a better a deal or coupon code to save some of your hard-earned money. Use that savings to attack your debt.
Make room for fun
When battling debt, it’s easy to get worn out if you don’t build in some entertainment money into your budget. Set aside a reasonable amount every month for some family fun. It doesn’t have to cost a lot, but a home movie night, with pizza and ice cream for the kids might be just the thing to help you stick to your budget!
Plan for Christmas 2013 NOW!
Now? Yes! If you spent $600 on Christmas gifts in 2012 and charged them to your credit cards, that is the equivalent of $50 per month. Start setting aside $50 per month, every month. When December 2013 rolls around, you will have the cash to buy all your presents and avoid another credit card hangover.
Did we miss a sure fire way that you used to get out from under the Christmas debt monster? Let the community know in the comments section below!