Get Your Accounts Back on Track after Holiday Spending
The holidays have a way of expanding our waistlines and shrinking our bank accounts and available credit. If you are guilty of overindulging, particularly when it comes to spending on gifts, there are ways to get back on track.
The typical U.S. shopper plummeted into debt by $1,073 in 2015, and it's estimated that more 50% of those people repeated this overspending in 2016. Though some people wisely create budgets for buying holiday gifts, nearly 60% fail to actually stick to their spending cap.
If you are looking to buy a home soon, you want your credit to support your effort. Getting back in the green is a good way to make that happen.
- Determine what you spent. In order to devise a way to pay off the debt, you need to know where you stand. The bill you get today may not reflect all your purchases before the holiday. You will want to go online and review your pending purchases, there may be more charges coming. Calculate in the purchases made with checks that have not yet been cashed.
- Pay down credit cards that carry the highest interest. Department store credit cards usually have higher interest rates than regular credit cards. Examine your statements and determine which will be the costliest over time, then make a list of what to pay down first, second and so on.
- Determine your new budget. Determine where you might free up extra cash within your budget. Cut back on entertainment, dining out, and clothing. Be sure to allow for savings, put a little aside for emergencies.
- Put extra money toward your debt. If you are getting a raise or a bonus in January, put the extra cash toward a credit card payment. If you need to take on an extra side-job to bring home some additional income to help your bank account recover from holiday spending.
Holiday debt could cost you a plenty over time. The higher your interest rates, the more you will pay over the course of repayment. Pay down your debt quickly and your credit score will also not be greatly impacted, which your Realtor will tell you is a very important detail when it comes to buying a home.
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