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Drowning in Holiday Debt

Drowning in Holiday Debt

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Homecare experts discuss how to avoid drowning in holiday debt

by Milena Filazzola C.M.A.

So the holidays are over. Presents have been exchanged, family gatherings are over, and leftovers are almost gone. Now is the time to relax--maybe not. A haunting villain has entered your life--overextended credit card debt from those extravagant purchases or special gifts that didn't seem too bad being paid by plastic. We sometimes forget that the "buy now pay later" philosophy will always come at a price.

Now what do you do? Look for a second job? Not to worry, simple solutions can be found in changes to lifestyles, spending habits and credit card attitudes.

In simple terms, you look at your debts and develop a plan to pay them off. The key is to ensure that debts are paid off before the next holiday season, and hopefully some lessons learned not to repeat the same situation. Easy? Follow this advice by our homecare professionals.

A. Getting the Financial House in Order:

We will use this basic algebraic equation to bring out the points: A - B = C

A is the money coming into the household--e.g. paycheque, pension, bonus, income tax refund.

B is the most important element, key expenses that must be made--e.g. food, shelter, utilities.

C is the excess money left to be stored away for “a rainy day”.

Let's assume that "A" is the same before and after the holidays. As "C" is what is available to pay down our debt. The key will be to look at opportunities to reduce "B".

  1. Eat or prepare your meals at home. Prepare something the night before, get up earlier, and eat breakfast. Make extra food at dinner and take to work the next day for lunch. Nowhere to warm up leftovers--make something the night before or bring a thermos. Do not yield to temptation to eat out with co-workers. Not only will your pocketbook love you but your body too.
  2. When grocery shopping, stay along the peripheries. Everything you need is there, dairy, fruits, vegetables, meats and bakery. Stem the cravings to buy prepared meals frozen or canned. Again your pocketbook and body will love you.
  3. Absolutely limit your shopping to only necessities. That extra video game, fancy cell phone upgrade or fancy coat can wait.
  4. Temporarily put gift cards away unless they will fully pay for the item you want. That card will get you into a store. Once inside, "artificial needs" will entice you buy more than what is on the gift card. Most cards no longer have expiry dates so you can use them later in the year to treat yourself for a job well done.
  5. If you made a holiday purchase on impulse and probably can live without it, return it. You probably will never use it anyway.
  6. If possible, walk bus or cycle to work or for your errands. You will save on gas, wear on your vehicle but most important you can shed those holiday love handles without the expense of a gym and feel better.
  7. Look around your home for unused or unwanted items. Try selling them--online or in a newspaper. Great way to declutter.
  8. Look at your living habits in respect to heating, water, electricity; For example: How many electrical devices are on and not being used? Do you really need all the bells and whistles on your cell phone, TV or home phone packages? Check windows and doors for drafts.

B. Getting the Credit Cards in Order:

If you only have one credit card to manage the solutions are simpler:

  1. Follow cost cutting measures as outlined in section A above to determine surplus cash.
  2. Try to obtain a low interest loan. Negotiate a payment amount (based on the result of step 1) that will allow you to pay off the loan in a reasonable time. Pay the card off, then immediately hide the card and do not use until the loan is paid off. Live on cash only.
  3. If you cannot get a loan, then set an amount aside each month to get the card paid off. This would be based on how much you have managed to save from step 1.
  4. Never pay only the minimum amount on your credit card. With current credit card extortion interest rates, your balances will take many many years to pay off.

If you have multiple high balance credit cards, though very stressful, solutions are possible.

Consolidation of credit is the easiest to manage and can be done as follows:

  1. Follow cost cutting measures as outlined in section A above to determine surplus cash.
  2. Try to obtain a low interest loan for the total of all the credit card balances. Negotiate a payment amount (based on the result of step 1) that will allow you to pay off the loan in a reasonable time. Pay them all off. Cut up every card except 1 (keep for emergencies) and put that one away. Live on cash.
  3. If you cannot get a loan, try to consolidate your balances onto the card with the lowest interest rate. Watch out for balance transfer fees.
  4. Set an amount aside each month to get the card paid off. This would be based on how much you have managed to save from step 1.
  5. Never pay only minimum amounts on your credit cards. With current credit card extortion interest rates, your balances will take many many years to pay off.

Remember that the goal to getting out of debt is determination and a little sacrifice but well worth it.

“What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience?”

-Adam Smith

If you are struggling to manage your financial, work and family obligations, it may be time to invest in appointing a nurse manager. Contact the homecare professionals at Qualicare for more information today.

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