If you are like many other people, you spent too much this holiday season. Instead of ringing in a happy New Year, you may be struggling to figure out how you are going to pay off that credit card debt after the holidays. You are not alone. Every year people spend too much at the holidays and struggle with paying it off later. Every year people fall behind in those struggles and end up with lower credit scores and financial stress. These problems are only going to be worse in a year like 2020, when so many people are hurting financially, but also trying hard to give their families as “normal” a holiday as possible. Fortunately, we have some steps you can take to pay off your credit card debts.
The first thing to do is look at the total amount of debt. You want to be able to pay it off quickly, ideally by April. If you can increase your payments and pay off that amount by then, then you may not need to take other steps. If that looks like it will not be possible, then you want to look at other ways to reduce your debt. The interest you pay can become a significant burden, the longer you take to pay off the debt.
First, look at ways to reduce interest. You may look into getting a personal loan, transferring balances to a lower-interest card, or seeing if your credit card has an option for fixed-payments at lower interest rates. It never hurts to call your credit card companies and see if they will extend lower interest rates for your existing cards.
Next, look at your assets. Do you have stocks or cash in savings? Generally, you are going to be earning less on that money than you are spending on interest. It may make sense to use that money to pay off your credit card debt. In fact, you might even consider making a withdrawal from a retirement account to pay off debt, if you can replace that money within the time allowed by law. If you do not want to withdraw money from a retirement account, you could also consider reducing contributions to retirement until you have balances paid down.
Finally, look at what you can sell. You probably have toys, clothing, and electronics around your home that are no longer being used. Instead of letting them sit around and collect dust, consider selling them and using the proceeds to pay down card balances.