The holiday season is a great time to buy sentimental gifts for all of your family and friends. Unfortunately, this also means spending much more than you typically do during the rest of the year. After the holidays are over, you can be left with a lot of debt. With 2020 in full stride, has your debt got you down? Here are 5 steps to a debt-free future.
1. Minimize Your Spending
When debt is growing each day from high-interest rates leading to even higher balances, it can become a serious hindrance to your mental health. Try to minimize spending during this time of repayment. The more you add on to your principal balance, the more money you’ll end up having to pay in the long run. Only buy the things you need, like groceries, gas, utilities, and bills of course. If needed, try to stay away from any stores or places that may lead you to splurge. Don’t highly restrict yourself, but don’t spend frivolously either.
2. Take Advantage of a Low-Interest Loan
If your debt is getting out of hand, it may be time to consider paying it off with a lower-interest loan in order to prevent tacked-on interest payments. Since most credit cards usually rest around a 20% APR interest rate, that’s a lot to save over time. Act quickly when you realize the interest rate on your credit card is starting to rack up, and start searching for a debt payoff loan that works best for your needs. Either way, you’ll likely be paying around 10% less on a loan than in credit card fees.
3. Credit Balance Transfers Are Your Best Friend
Another quick alternative to lessen the blow of built-up debt is a Credit Card Balance Transfer. Similar in savings to a loan, this is when you transfer your higher-interest balances onto a lower-interest credit card and pay a lower rate until your balances are paid off. Over time, this solution will save you loads of money and help you make more payments on your principal balance rather than mountains of accumulating interest.
4. Save, Save, Save!
In this instance, you may not have been prepared for the oncoming holiday debt. Make it a New Year’s resolution to start saving more in preparation for big spending. It’s nice to not think about your funds when continuously swiping your credit card, but it’s even nicer to have a large nest-egg to fall back on when you’re in need.
Open multiple savings accounts to track these goals and save up enough to shower your friends and family with the gifts they deserve. The incentive for planning ahead is a higher interest rate, meaning you’ll have even more money when the terms are up. Select the type of account that works best for you, and start stockpiling those pennies! With this easy step, you’ll be ready for any financial hardships or random splurging.
5. Steer Clear of Future Debt
We understand how hard it is to stay out of future debt. It’s easy to grab a whole new wardrobe while scouring the racks of Nordstrom, or a funky piece of furniture at that cute antique shop on the corner. Try to build the habit of saying “no” as you move into the new year.
If you absolutely must buy that thing, make sure you have a reputable and low-interest credit card at your side. And if you find yourself in another financial sinkhole, don’t hesitate to pay off debt with lower-interest loans before the interest starts accumulating. If you have a hard time staying true to your spending limits, try constructing a budget and sticking to it. Staying out of debt will have a long-term benefit on both your credit report and score.
Holiday debt lingering a little longer than intended? It’s time to find a solution. Our team is highly knowledgeable in financial planning and can help you get back on track. With low-interest rates and a wide variety of flexible products, a better financial future is right around the corner. Don’t let the pressure of debt bring you down – give us a ring or reach out via email today!