The holiday season is just over. We’ve just splurged a bomb this Diwali. And before you know it, Christmas and New Year will be knocking at your doors. Apart from uplifting the mood of people, the festive season is a time for many to pack their bags and take off on a vacation.
While some travel to visit their family and celebrate Diwali or Christmas together with loved ones, many head off to popular holiday destinations like Goa, Thailand, Bali, etc. to welcome the New Year in style.
And even if you are not planning on a vacation this festive season, you tend to have your hands full with holiday shopping, decorating your house, and hanging out with friends and family. While festive seasons are super fun, we all tend to go overboard with celebrations and end up burning a big hole in our pockets.
With vacation, shopping, house decoration and much more on the cards, festive seasons are an excuse for us to splurge. Believe it or not, the holiday season is the period during which most people accumulate sizeable debts that they struggle to clear off later. Holiday debt can be a pain to deal with unless you have a plan to get over it. We, at BankBazaar, have decided to lend you a helping hand to pull you out from the quicksand of holiday debt. Here are 7 ways to bid goodbye to holiday debt:
Follow a strict budget
Budgeting works wonders to clear off any type of debt and holiday debts are no different. Although budgets are easier to plan and difficult to implement, they help a long way in saving money that could be used to pay off debt.
Write down a detailed budget plan by tracking your income and your expenses. Identify the unnecessary expenses that could be avoided and make a note of expenses that can be subjected to cost-cutting. While planning the budget, make sure that you focus on basic needs and keep luxurious wants at bay. Yes, this will require you to be strong-willed in order to implement.
Once you are done with planning a budget, it is time to follow it strictly. You can save a lot of money by just avoiding partying over the weekends at bars and restaurants. Use public transport instead of cabs. Cook food at home instead of ordering from a restaurant. Switch to cheaper mobile plans. These are small yet effective steps towards cost cutting that will improve your savings and thus help you in clearing off your holiday debt. One step at a time will work wonders for you.
Additional Reading: 4 Possible Leaks In Your Budget
Focus more on debt with higher interest
When you are out festive shopping or planning a vacation, Credit Cards seem like the most attractive mode of payment thanks to their ‘buy now, pay later’ policy. As you keep on swiping, Credit Card bills pile up and soon you are carrying a mountain of Credit Card debt.
If you have swiped multiple Credit Cards while you were on a vacation or holiday shopping, then it would be wise to focus on clearing the balance of the card that has the highest interest rate. By focusing on clearing high-interest debt faster, you can save money that you would end up paying in the form of interest. And with current Credit Card interest rates skyrocketing at close to 35 % APR, the longer you take to clear the debt, the more money is likely to trickle out of your account.
Additional Reading: Tips To Deal With Credit Card Debt
Try paying more than the minimum amount due
In the world of Credit Cards, there are very few things that are more harmful than just paying the minimum balance due. According to experts, a major chunk of holiday season expenses are covered by Credit Cards. But when you are unable to clear the balance in whole before the cycle, that’s when the debt starts to accumulate and before you know it, it turns into a financial pickle.
So when you are dealing with Credit Card debt, always try to pay more than the minimum amount that is due as it not only helps in clearing off the balance faster but also saves money that might have been wasted in paying interest. When you consistently pay a little more than the minimum due, you will see a gradual decrease in your holiday/Credit Card debt.
Sell unwanted household items
Holidays and festivals are occasions to revel in celebrations with near and dear ones. But more often than not, our finances go south during holidays as we leave no stones unturned in having lavish celebrations by splurging money. With so much holiday debt on your shoulders, you can ease your financial burden by selling your unused household items.
Take out that unused vacuum cleaner and sell it for a good price online. Sell that dining table that you have barely touched since the day it arrived. Sell your old car, which you no longer drive, for a reasonable price. By just looking around your house, you can identify all the stuff that you don’t use and sell it through sites like OLX, Quikr etc. to earn money, which will go some way toward clearing your holiday debt.
If you have recklessly swiped your Credit Cards this festive season, then no wonder you are fretting over a gigantic Credit Card bill that is coming your way. If you have used multiple high-interest rate Credit Cards, then it is advisable that you consolidate your debt by transferring all the balances to a 0% APR card. Note that the 0% APR is valid only for a certain period, so try to clear off your debt within that period. Balance transfer and debt consolidation will help you save money that you would have spent to cover the high interest of Credit Cards.
Additional Reading: Balance Transfer Between Credit Cards: Things To Consider
Put shopping on hold
Picture this. The holiday season just got over, leaving your finances shaken and unstable. But you have a big event coming up like your wedding anniversary, children’s birthday or the wedding of a dear one. So you go out to shop again and take out your Credit Card to buy an expensive gift for the occasion. Stop right there.
Shopping post-holiday season is a huge no-no as you are already carrying a pile of holiday debt and you should not add to it by shopping more. If you have a special occasion coming up, try DIY gifts that are more personal. After all, it is not the gift but the sentiment behind the gift that matters. If you are a shopaholic, then control your strong impulsive shopping urges by locking your Credit Card at home. Though putting shopping on hold might not seem like the best solution to deal with holiday debt, it indirectly helps you by not adding to your Credit Card debt and helps you save money that you could use for debt clearance.
Earn extra money on the side
‘You are not your job, you’re not how much money you have in the bank. You are not the car you drive. You’re not the contents of your wallet.’ This famous line of Tyler Durden in Fight Club does hold true in real life as we can’t be defined just by our job or money.
Our hobbies, skills and deep-rooted passion contribute immensely to who we are. At times of dire financial needs such as the post-holiday season, where you are trying to clear off your holiday debt, it is advisable to monetise your hobbies and passion to earn extra money. If you are good at cooking, sell your food through numerous home-food apps such as Yumist, HolaChef, Biteclub or even a Facebook page.
If you have musical talent, try paid gigs at different events in and around your city. Look for part-time jobs that pay you well like freelance writing, online tutoring etc. If you are the only breadwinner in your family, then encourage your spouse or partner to find a job and help the house by earning extra money that can be used to clear holiday debt.
Though it is easier said than done, following the above-mentioned steps will help you become debt-free post the holiday season. It is advisable to plan everything out for the next holiday season so that you don’t end up attracting a huge debt. From having a separate holiday savings fund to redeeming Credit Card reward points to buy gifts, there are plenty of ways by which you can ensure a debt-free holiday. The idea behind planning for the next festive season is not to compromise too much on holiday fun but to indulge in celebrations and merriment without denting your wallet.