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Credit Card Debt

As the holiday cheer fades, decorations are taken down, and the New Year begins, many Americans are faced with an unpleasant reality: holiday hangover. Otherwise known as credit card debt . Each January, many of us discover the joy of the holidays has led us to once again over- spend. According to, between Thanksgiving and Christmas people last year spent $121.4 billion using their credit cards! Is there a way to limit credit card purchases?

Budget – The reason credit card debt is so high in this country is the “buy now, pay later” mentality. The credit limit on your credit card allows you to disregard your limited amount of monthly disposable income in favor of “paying later.” But, unless you are expecting a nice raise in the near future, how will you pay off that debt? An alternative choice to purchasing with a credit card is to budget by paying with cash or a short-term loan. You are more likely to purchase less with cash than if you are using a credit card. Most people use their cards with a promise to themselves they will pay off the balance in a month or two. Instead, seven or eight months later, they’re still trying to get them paid off; sometimes they can just barely afford to pay the minimum balance each month. So rather than making your purchases with high interest rate credit cards the next holiday season, pay with cash or a short-term loan that will require you to pay off your shopping purchases in January. You can then budget based on your January disposable income.

Create a Plan – It’s a known fact that a high percentage of purchasing is done on impulse. You are much more likely to overspend if you do your holiday shopping without a list – purchasing whatever catches your eye. Sit down and make a list of everyone that you need to buy for, and several gift ideas for each of them that are within your price range. Then your in-store or online shopping will be easier and you are less likely to overspend on an impulse buy.

Comparison Shop – Once you’ve made a list and checked it twice, shop around. Don’t just buy a gift the first place you see it. Check the newspapers, call around or shop online. There are many great comparison shopping sites on the Internet that tell you what stores are charging for the same item. In addition, by shopping online, you may be saving money. Most web sites offer Internet-only specials, and most offer free shipping for the holidays.

Plan for Next Year – Make a New Year’s resolution to plan ahead for next year. Start putting aside some cash each month into a savings account specifically for next year’s holiday shopping. By planning ahead you will be able to budget for more spending, pay with cash, and avoid the holiday hangover next year!