Magical Credit Blog

Subscribe and get the latest news, promotions and updates from Magical Credit.


10 Tips to Freeze out Your Holiday Debt

by

The Holidays are over. You can finally relax after weeks of parties, shopping, and holiday hustle and bustle. Your gifts were a hit, and your decorations were straight out of a home decor catalogue. You can get back on track with your regular spending habits, right? Just as you’re about to relax, your holiday bill arrives, and it turns out you spent a little more than you should have. What now?

Follow these 10 tips to freeze your holiday debt, and start your new year off on the track to financial freedom!


post holiday loan cash loan

1. Avoid Accumulating New Debt

The key to managing holiday debt in the New Year is to avoid creating new debt. This means that you should avoid Boxing Day sales at all costs. If you can’t afford it, it doesn’t matter how great the sale is. You can avoid creating new debt by steering clear of using your credit card until old debt is paid down. If you have to make purchases, pay with debit or cash. This will avoid the interest rates that come with using credit cards.

2. Return Unwanted Gifts

During the holidays, you probably receive a lot of gifts from family and friends that you don’t have any need for. There is nothing wrong with returning a gift that will just sit, unused in a box. If a receipt was provided with the gift, return it to the store for money back (to pay off your debts), or get something that you do need and would have otherwise bought for yourself.

3. Transfer Charges to Lower Interest Cards

If you have multiple credit cards or lines of credit, determine which type of credit has the lowest interest rate and transfer all your debt so that you’re paying the lowest amount of interest. Transferring the debt won’t get rid of it, but it will save you money in the long run.If you keep debt on multiple cards, it can also be a pain to remember to pay off multiple bills at different times of month, so having all your debt in one place makes it easy to remember to make payments and avoid more debt.

4. Consider Applying For a Cash Loan

A short term cash loan is another solution to holiday debt that can help manage interest rates before your debt increases. Although a cash loan is another payment you will have to make, reaching out to a loan company can make holiday debt recovery easier. Loan companies can offer short term cash loans that are sometimes more flexible and less expensive than credit card debt.

5. Pay Off Your Largest Debt First

When it is time to start making payments towards your holiday debt, consider paying off the biggest bills first. Big debt means big interest rate payments. Paying off the larger bills first reduces the amount of extra money you will need to pay towards those bills. If you get the large debt out of the way, you can slowly pay off smaller, more manageable debts.

6. Pay as Much as You Can

Once you’ve determined which of your holiday bills needs to be paid first, pay as much as you can. Avoid luxuries that aren’t necessary and put that money toward your debt. Keep in mind that you still have essential expenses to pay, such as mortgage or rent. However, any available money should be put towards that bill. You might have to take money out of your other budgets for the month, such as your entertainment budget. If decreasing your debt means you have to skip the movies a couple times, or eat leftovers, then so be it. Remember that getting yourself back on track to financial freedom should take precedence.

8. Don’t Dig Into Other Savings

Paying as much as you can does not mean taking money out of your savings to pay off debt. If you reallocate your savings to pay off debt, your debt may be gone for the moment, but you have a higher probability of falling back into debt because you will have no savings to rely on for emergencies, such as car trouble, family illness, or repairs for your home.

7. Pay Your Bills on Time

Part of managing your debt is staying on top of your payments. If your bill is due mid month, make sure that you have the money to pay the bill. Set it aside in your budget ahead of time. Paying your bills on time will ultimately reduce your interest rate, and it will help your credit score. If you are paying bills consistently late, your credit score will reflect that, and it will be difficult for you to receive loans, or credit in the future.

9. Monitor Your Payments

Keep track of your payments so you are aware of where you stand with your debt. You should know how much you paid, and when you made payments, so you can monitor your progress. Remember, the sooner you pay off debt, the better chance you have of reaching financial freedom.

10. Prepare for Next Year!

Take what you learned from your experience, and grow from it! If you overspent this holiday season because you didn’t have the finances to purchase everything you needed, think about how you can prevent going into debt next holiday season. You can start a holiday savings account early in the year, and add money to it throughout the year. This way, you will have money next holiday season that you can use without putting yourself into a tough situation. The best way to prevent holiday debt next year is by planning ahead.

If you are struggling to pay off holiday debt and need a fast cash loan, fill out an online application form to qualify for a post-holiday loan. We are a Toronto-based loan company that provides bad credit loans to people on government income, subsidies and pensions. You can call us at 1-877-213-2088 to learn more about our post-holiday loans.