Got the Christmas Debt Blues?

by Kevin on February 1, 2010

It’s been just over a month since Christmas, which means the credit card bills are probably trickling into your mailbox right about now. I hope you aren’t suffering from sticker shock, but if you are, we would like to help you come up with a plan to eliminate your credit card debt quickly – so you can move on to the more important things in life.

How to dig out of credit card debt

If you still have some credit card debt hanging around from Christmas, now is the best time to come up with a winning game plan to eliminate it. Otherwise, new charges will continue to accrue and you will find yourself falling further and further behind. The following tips will help you eliminate your credit card debt more quickly than if you were to make the minimum payments each month.

The first step of any debt reduction plan is to make the commitment to stop using your credit cards or other forms of loans. You won’t be able to make much progress when you continually add to the principle.

Assess the damage

The second step to any debt reduction plan is making a full assessment of your debt. Gather each bill and create an up to date list of your creditors and list the amounts owed to each company, the minimum payment, and the interest rates. We will use this information to create a plan to eliminate your debt as quickly as possible.

Come up with a plan

Now that we have an up to date list of all your expenses, determine how much you can pay each month and write that number down. Then add up the minimum balances for each payment you have, and subtract that from the amount you can afford to pay each month. We are going to apply the difference to get rid of your debt more quickly.

Pay more than your monthly balance

Take the difference from the previous step and apply it to the credit card with the highest interest rate. For example, if you can afford to pay $500 per month and you have 4 credit cards that each have a $100 minimum payment, then you can pay the minimum on 3 cards, and pay $200 on the card with the highest interest rate. This will help you pay off the card with the highest interest rate first – saving you more money in the long run.

Transfer credit card debt to a 0% balance transfer credit card

Another idea is to transfer your credit card debt to a 0% balance transfer credit card to reduce the amount of interest you pay. o% balance transfer credit cards work by transferring the debt on your current credit card to another credit card at a 0% interest rate. Credit card companies do this to bring in new customers. Consumers do it to save whatever interest rate they were paying. It works out great for everyone!

Use your tax refund (if you have one)

Tax season is upon us, so consider using your tax refund to reduce your credit card debt if you expect to receive a refund. Sending in a large chunk of cash to pay down debt may not be the most exciting thing in the world, but it beats making payments to multiple credit card companies for months on end.

Make the commitment to ending debt

None of these tips will work if you don’t make the commitment to stop using credit cards and adding new debt. Each new charge delays your ability to eliminate your credit card debt.

This is a guest post from Patrick. He writes about personal finance and career topics at Cash Money Life.

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February 7, 2010 at 12:16 pm


Ken February 1, 2010 at 2:29 pm

I especially like the one about using tax refund. This makes logical sense. Making a list is good. How many people just keep paying minimum payments and spend all year(s) paying off Christmas (with interest)? Good post.

Kerri February 3, 2010 at 1:11 pm

I’d recommend an online tool called DebtSpark for post-holiday help:
It allows you to enter your stack of bills, along with income and expenses to give you a quick picture of financial health–or holiday damage!

finance February 4, 2010 at 1:12 am

nice write up you have their assess the damage.. I think it’s what people usually add up to their new year list Christmas debt payment. LOL. 🙂

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