Tips For Paying Off Christmas Credit Card Debt

 If the spirit of the holiday season put you into a shopping spree that has left you with credit card debt, you are not alone. The average amount people spend on Christmas gifts is around $1800. The sad reality is the fact that the people spending this amount of money on presents don't have the money to pay off their credit cards in full the next month. So they pay the minimum amount on their credit card bill and get deeper in debt.

 If you are one of the many thousands of people paying the minimum amount on your credit cards, you may be shocked to learn that by the time you pay off the credit card, those gifts that you bought for Christmas end up costing you double or more of the original price. So that game system that you bought for your child for a bargain price of $300, with your high-interest credit card, actually cost you over $600!

Tips For Paying Off Christmas Credit Card Debt

The best tip for paying off credit card debt from Christmas is to not use your credit card if you can not pay it off in full when the bill comes due. Since you have already made the mistake of spending more than you have, this tip is useless for you. 

So now it is time to move forward and learn about tips to pay off your credit cards. Make this the year that you learn how to take control of your finances. 

 1. Make a budget

The most important step to paying off credit card debt is to make a budget. A budget is a necessary step to take control of your spending habits. When you see where you spend your money, it may help you spend better. 

What Is a Budget?

 A budget is a plan for your money. A budget can help you spend your money wisely, so you can learn to live off the money that you earn. As I tell my kids, it is not about how much money you make but rather about how you spend. If you have X amount of money coming in, then only X amount of money can be spent. This is a tough thing for most people, even rich people. Spending money can be fun, but living with debt is not fun. Starting a budget will help you get your spending under control.

Four steps to making a budget

Budget Step 1: List Your Income

Budget Step 2: List Your Expenses

Budget Step 3: Subtract Expenses from Income

Budget Step 4: Track Your Transactions

 To start your budget planning, you need to decide how you are going to make your budget plan. Decide if you’re making a budget on paper, with a spreadsheet, or in a budget app. Then grab your paycheck stubs, bank statements, credit card statements, and your spouse if married. Of course, the best way to see all this money info is to go to your online accounts. Learn more about budgeting here.

Decide How to Spend Your Money

 Once you see your monthly income and expenses, it is time to make some changes to your spending. Look at your expenses and decide which ones you can eliminate or cut back on. By doing this, you may be able to have extra money to apply to your credit card bills.

 This is where it gets tough, but if you want to eliminate debt, it is necessary. Spending to consider includes monthly subscriptions for streaming music and movies, eating out, daily coffee shop trips, and any other unnecessary expenses.

 Some expenses can be lowered, like utility bills and food expenses. Turning down the heat and putting on a sweater can save you money, as well as comparing prices at the grocery store. My go-to source for money management tips is Dave Ramsey. His website has good information on getting out of debt and budgeting tips.

Tame Those Credit Card Balances

 After looking at your income and expenses, hopefully, you have made steps to have extra

 money that can be applied to your credit cards. Paying even a little more each month will reduce the amount of time needed to pay off the balance and reduce your interest costs.

 Making minimum payments can be very costly, especially in the long run. Making minimum payments of $60 on a $3,000 credit card balance would take eight years to pay off and add up to $2,780 in interest! This Credit Card Payoff Calculator can help you estimate how long it will take to pay off the debt.

 If you have more than one credit card, put the extra money towards the one with the lowest balance first. Once that card is paid off, apply the extra money to the next card. The most important part of taming the credit cards is to stop using them. It may even be wise to close up credit cards after you pay them off. 

Consolidate Cards

If you have several credit cards with balances under $2000 that you need to pay off, combining them may help pay off the balance more quickly. A loan may allow you to pay off a couple of credit cards. A loan may also have a lower interest rate, which may speed up the time that it takes to pay off the debt.

Benefits of Paying Off Debt

Paying off debt offers significant financial and psychological benefits, including saving money on interest, improving your credit score, and experiencing a notable reduction in stress and anxiety. It is a foundational step toward long-term financial security and freedom.