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Man Christmas shopping with his credit card

Maintaining a budget is one of the keys to avoiding debt, but during the holidays, it may be more challenging to stick to it. With the purchase of gifts, fancy dinners and decorations, it can be nearly impossible to make it through the season without incurring a little credit card debt.

In fact, about 15% of Americans are still paying off their holiday debt from 2017. If your credit card balance is more than you anticipated, here are some of the best ways to pay it off.

Make a Budget

Budgeting helps you understand the amount of money you have coming in and going out. If you don’t already have a budget, now would be a great time to develop one. You’ll want to start with your adjusted gross income (AGI); it’s a common mistake to overinflate your income, which can wind up being detrimental to your budget.

Once you understand what you have coming in, begin adding up all of your expenses. It may be beneficial to create a spreadsheet to help you keep track of your expenditures. Be sure to separate fixed costs from variable ones. This will make it easier to determine areas you may be able to cut back on in the future.

A good rule of thumb is to aim for a 50/30/20 budget. This means that 50% of your income goes toward fixed expenses, such as your mortgage, while 30% goes toward variables, such as groceries. The remaining 20% is for savings.

The 50/30/20 rule gives you a solid starting point for developing a budget. Be sure to include your new credit card debt as well; your budget will be a helpful guide for creating a plan to repay it.

Cut Expenses

In order to speed up your debt repayment, try cutting back on expenses. Review all your monthly bills and find places where you may be able to slim down.

For example, you may decide you can go without your gym membership for a few months. Many gyms allow their members to freeze their accounts. Sometimes this comes with a fee, but it tends to be a lot less expensive than paying your monthly membership. You can look for alternative workout options, such as exercise videos, using your subscription services or YouTube.

Think of reducing your expenses as a spending diet. It may not be your long-term plan, but it will help you get on the right financial track to repay your holiday credit card balance.

There are numerous ways you can slash your spending. Get creative and decide what you might be willing to live without for a while. You may come to find you don’t miss it at all.

Increase Your Income

Do you have a few handyman skills? Are you fluent in another language? Do you love to sell art on Etsy? No matter what you’re good at, there could be a way to make extra money doing it.

Take on extra side jobs or start teaching a different language. Even if you increase your income by only $100 a month, this will minimize the financial burden of your debt repayment. Increasing your income is a great step toward paying off your debt.

Negotiate Lower Interest Rates

Call your credit card company and try to negotiate a lower rate. If you have good credit, creditors may be willing to cut you a break. They want to hold on to your business, so they might lower your rate to keep you as a customer.

Sometimes, though, they won’t budge. In that case, you can shop around for other credit cards with better interest rates. You may then want to transfer your current balance to your new card. Be sure to check all transfer fees; you don’t want to end up paying more than you originally anticipated.

Increase Frequency of Payments

Consider making small credit card payments throughout the month. Slowly chipping away at your balance will help prevent more interest from accruing. Even if you contribute $25 a week, you are still inching closer to repaying your holiday debt.

Instead of dining out or going to Starbucks, put that money to good use and make a payment toward your balance. Remember, every little bit counts.

Find Extra Savings

Do you bring coupons when you go grocery shopping or head to your local pizzeria? If not, using them can help you pay off your holiday debt. Even if each coupon saves you only a few dollars, your savings add up over time.

Making use of coupons and discounts can also get you into the habit of looking for great deals instead of spending frivolously.

Watch Your Spending Habits

Do you enjoy frequenting your local coffee shop on your way to work? Do you find yourself shopping online during your lunch break? Everyone has a different spending vice that brings them joy. Unfortunately, these joyful habits can leave a dent in your budget. This is especially true if you’re working toward repaying the balance on your credit cards.

Your toxic spending habits may not be obvious at first glance. Review your bank statements and track your charges to highlight areas where you may need to cut back. Doing so may yield long-term benefits and help you avoid additional holiday credit card debt in the future.

The Bottom Line

Holiday credit card debt can feel like a large financial burden, but it doesn’t have to be. With a little budgeting and planning, you can pay off your balance in no time. By making a plan to repay your debt, you’ll not only create better financial habits; you’ll also set yourself up for a more successful financial future.

What are some of the best ways you’ve repaid a large amount of debt? Did this lead you to improved habits? Please feel free to leave your comments below. We want to hear from you.

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