Money Fix: Paying down holiday debt
Get control your holiday debt by paying off the high-interest credit cards first. (Dec. 26, 2011) Credit: AP
You contributed happily to the nation's mega-billion- dollar holiday spending spree. Now you've got credit-card-bill shock. There's a remedy for that.
First, check your statements for accuracy: If you're guilty as billed, categorize the credit cards by interest rates and balances. Pay off the highest interest ones first, advises John Baldi, a personal finance specialist with Castle Asset Management in Hauppauge.
Pay two or three times the minimum: Otherwise you'll barely cover the interest you owe, to say nothing of the principal. It will take years to pay off the balance, and you'll spend much more than the original amount you charged. Round off your monthly bills to the nearest hundred to force yourself to pay more than what's required.
Negotiate a lower interest rate with your creditor, or transfer your balance to a zero- interest card if you can, says Baldi.
Forget fun: Cut massages, your favorite restaurants and lattes until you can open your bills without a grimace. Set a time frame for austerity. Knowing it won't last forever helps.
Come up with extra cash: Work overtime, temporarily take on a second job, sell gently used goods on eBay or Craigslist. If you have received large tax refunds the last few years, reduce your withholding to increase your cash flow, says Paul Schifter, a certified financial planner with PCS Financial Planning in Commack.
Don't let those bills linger: Vow to do better next year by saving more or buying less.
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