The holidays are indeed a time of indulgence. Even those on a strict budget may be faced with living a bit beyond their means to get through the holiday season. But along with the month of January and the New Year come the bills leftover from the end of last year, and some households are carrying debt they won’t be able to afford when interest rates rise again.
Consider consolidation: there are many ways to consolidate your credit, like obtaining a line of credit at a lower rate than your cards, resulting in less debt and a better credit rating. The do-it-yourself method of snipping up all of your more expensive cards with higher interest rates and leaving one for emergencies works too, eliminating the accumulation of further debt and letting you concentrate on paying off what you already have. This will also help with one of the most recommended methods of paying off credit card debt, by paying off the highest interest rate cards first. Pay as much over the minimum payment as you can each month, otherwise that $3 cup of coffee (it’s okay, we all do it) will end up costing you $10.
Always be prepared: before shelling out extra cash and spending what you might not be able to afford by using your credit card, make a list of items or big purchases you’ve been planning for. Ask yourself if you really need it, and if not, scratch it off the list. Only bring your credit card along if what you plan to purchase is on the list, because otherwise you probably don’t really need it. If you budget appropriately for these expenses, you’ll be able to just sit back and watch your savings grow.
When trying to increase savings, most people consider buying fewer unnecessary items or looking for savings on things they need to buy every month, like groceries. They don’t consider their “fixed” bills, like cable, internet, home phone or cell phone to be negotiable. Call your providers, and ask what they can do for you. The worst they can do is say no, and many companies offer larger discounts if you have more than one service with them. If you’re at the end of your contract, mention that you’ve been considering moving to another company that has a better rate. Even if you’re still in a contract, the fees for breaking it may only be $100 or so depending on your provider. Do some research and shop around, that $100 might be peanuts when it comes to the perks and savings you’ll get signing up with a new company.
Lowering the strain on your finances can help you prepare for higher interest rates if necessary, or let you hold onto a bit of extra cash just because you can.