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Cure Your Holiday Debt Hangover

02/03/2016 04:03 EST | Updated 02/03/2017 05:12 EST
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Cape Town, South Africa

Hands up if you spent more than you wanted to this past holiday. From gifts to entertaining to travel, it's easy to get swept up in the holiday spirit and dole out more cash than you first intended to. Now the credit card bills have started to arrive and you may be wondering where the extra money will come from? Often called the Holiday Hangover, lingering debt from this most wonderful time of the year can be a major financial burden all year long. Here are tips to get rid of it fast.

Know your number

Sit down and add up all the debt you have. Credit cards, lines of credit, a loan from a family member. Then add in any consumer debt you were carrying from before the holidays. Once you've got that grand total you realistically know the goal you're working towards. You have to face your debt head-on in order to move forward with getting it paid off.

Make a 90-day plan

Now that you have that number take it and divide it by 12 weeks. That will give you a general idea of what you have to pay each week in order to get it paid off in three months. Keeping in mind any outstanding balance continues to accumulate interest until you pay it off. If this number is too big you may have to take more than 90 days to pay your debt down. But the point is, make a plan to get debt-free and choose a reasonable timeline to make that happen. In the meantime, save where you can on the things you purchase regularly. Every-day rewards credit and banking products that allow you to earn and redeem points on things like groceries and household items will help you focus on debt repayment more quickly.

Start with high interest first

Once you've come up with a reasonable time frame to pay your debt down, start by paying the highest (i.e. most expensive debt) -- first. Do it week by week. While you're doing that, make at least the minimum payments on all your other debt, in order to help keep your credit score in good standing.

Return, Re-gift, Reuse

We get a lot of Christmas gifts we have no intention of using. Rather than hanging on to those items, return them for cash or a gift card. Otherwise you're letting value (money) waste away in the corner of your closet. When possible, take back unwanted items in exchange for cash and use that to pay down your debt. If you're issued a store gift card or credit, I recommend saving it for the 2016 holidays or other upcoming special events that require a gift. For un-returnable gifts, exchange them for items you could use in your home. One year I exchanged three sweaters I was never going to wear, for a juicer. Two years later I'm still happily juicing and enjoying this gift. For gifts that can't be returned or exchanged, see if you can "re-gift" them away to someone else who might use and enjoy them.

Learn from your mistakes

Take a photocopy of the bill with the highest balance, marked with the debt number you came up with. Frame it and put this in a private place where only you can see it, maybe in your closet or your purse or wallet. Use this as a daily reminder of how easy it is to get into debt. Also leave a copy of your total debt amount with your Christmas decorations as you pack them away. This will serve as a good visual reminder to stay away from last-minute spending during Christmas 2016 and hopefully avoid a holiday hangover in 2017.

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