Money Management

Paying off the Christmas Credit Card Debt

One of the best things about entering a New Year is you can start afresh and think about what you want to achieve in the year ahead. Of course, if you have a little debt hanging around, one of your resolutions is likely to be paying it down.

To help get you started, here are some pointers of how you may be able to clear your credit card balance over the next few months:

1. Look for areas to cut back

The first thing you could do is have a look at your budget, to see if there are any areas you can cut back. For instance, while you’re paying off your balance, could you cut back on takeaway food and opt for home cooked meals instead? Could that gym membership be swapped for outdoor fitness with your friends? Every little bit counts and the money saved could be put towards paying down your debt.

2. Consider rolling over your balance

After Christmas there are usually plenty of competitive balance transfer deals, which could provide you with a low, or 0%, interest rate for an introductory period. What this means is you could pay off the amount owed without the bite of a high interest rate (for the honeymoon period). Alternatively if you have multiple debts from things like a credit card and loans, you could opt for a debt consolidation loan which allows you to roll multiple debt into the one loan. No matter which option you choose, make sure you will be able to comfortably afford the ongoing repayments and, if necessary, speak to a finance professional to help come up with the best solution.

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3. Make some extra money

No matter how diligent you are, there’s only so much you’ll be able to put towards your debt. So if you really want to kick that debt to the curb sooner, looking for ways to make some extra money could be a wise decision.

Here are three good ideas to make extra money in your spare time.

4. Avoid drawing on credit

While you’re paying off your credit card balance, it’s important you don’t draw on any more credit, as this could take you back to square one. Instead, you could think about putting your credit card away or out of sight (out of mind) so you aren’t tempted. Or if you’ve moved your balance over to a new credit card or loan you could consider cancelling your old card. These steps lets you focus solely on the task at hand – ridding yourself of your Christmas debt.

5. Start saving for Xmas 2018!

Once your Christmas debt is paid off, it’s a good idea to think about how you will pay for Christmas 2018. You could think about opening a high interest savings account and setting up a direct debit on payday. It may be a good idea to choose an account with limits on withdrawals so you won’t be tempted to dip into that cash over the year. Let’s say you put aside $50 a week, over a 6 month period that will be around $1,200 by the time Christmas rolls around. Which should be more than enough to pay for your pressies and Christmas lunch!

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