How to handle the headache of lingering Christmas debt

Photo Credit: KLFY

The holidays can be especially hard for those who struggle financially throughout the year.

Many people overcharge or open new credit cards to pay for gifts, but the key is to tackle any debt from holiday expenses before it goes from bad to worse.

“You start getting those bills in and usually they all come in at the same time. The worst thing you can do is to let them sit on the kitchen cabinet and not open them,” said Sharane Gott, President of the Better Business Bureau of Acadiana.

Gott says alot of the times she finds that people are unaware of their financial status or you find those who are aware, but neglect to pay up. Avoiding to pay your debt will only damage your credit history even more, so owning up to your responsibilities is key.

“When the credit card bills come in think about all the fabulous things you did with it,” said Gott. “So what you’re doing now is paying for those decisions you made then.”

Gott suggests that you make payments on your credit card bills or your credit score could suffer.

“Look and see what the minimum is, at least pay that, but try and pay more,” said Gott.

“My suggestion is you take the one with the lowest balance, pay that off, then you get that incentive that says “wow, I’ve got this one done I can do the next one,”” said Mary Luquette, a financial advisor and professor of finance at UL Lafayette.

Luquette suggests the financial sound approach, but emphasizes that that doesn’t mean you should ignore the rest of your credit card bills. Taking the time to simply budget and plan can keep you out of financial hot water later on down the road.

“The more you spend on those credit cards, the more you spend on things you don’t need, the more you’re delaying your retirement, so plan for your future. I don’t care if you’re 20, I don’t care if you’re 50, start it now,” said Gott.

Now there are other steps you can take to gain control of your financial situation.

“So you divide what you paid out this year into 11 installments because you’re taking it out in the 12th and then that way you save up, so that you’re not into the situation next year,” said Luquette.

Luquette suggests you start budgeting now so you’re not up against a wall come December.

“I think of budgeting as controlling. It’s a control mechanism, you control the money, the money does not control you,” said Luquette.

And if you just can’t help yourself and find that you’re overcharging your credit card on a daily basis, Gott’s biggest piece of advice is, “until you pay off all that credit card debt, hide your credit cards.”

Now that we’re well off into income tax season, Luquette suggests that if you are currently in a financial bind and you’re eligible for a tax refund, that money should be used to take care of any current debt, before just spending it freely.

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