How Can I Get Back on Track After Holiday Overspending?


Q: "I overspent over the holidays, and racked up some credit card debt. How can I get back on track quickly?"

A lot of people feel your pain right now. In fact, a December MagnifyMoney survey found that people nursing a holiday spending hangover are starting 2018 with $1,054 worth of new debt.

The first thing to do is to stop using your card, so your balance doesn’t continue growing while you pay it down. Then review your budget to determine how much cash you can put toward your debt each month.

If you’re paying off multiple cards, consider doubling down on the one with the lowest balance (while paying the minimums on the rest), which can quickly reduce how many cards you’re juggling. This is called the Snowball Method, and offers a nice motivational boost each time you finish paying off another card.

If you have good credit and a solid payment plan, you can also consider two other options:

1. Balance transfer to 0-percent interest credit card. Many companies offer interest-free credit cards for 12, 15 or even 21 months as a way to attract new account holders. Divide your debt by the number of months in the promotional period. If you can handle those payments, this can save you some cash. Just make sure to factor in any balance-transfer fee and keep in mind that the interest rate will likely spike after the promotional period expires.

2. Personal loan. If your balance is higher than you can realistically pay off with a balance-transfer card, look into consolidating and refinancing your debt with a personal loan instead. You can often find personal loans for less than 10-percent interest.

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