Manage Your Debt Before the Holidays


As the holiday season approaches, it is important for consumers in Oak Park to think carefully about their finances and current consumer debt, and ways to avoid overspending on gifts, travel, and other costly ventures. As a recent report from Consumer Affairs explains, consumers often do not plan ahead for the economic costs of the holidays, and as a result, they end up taking on more credit card debt that they may not be able to pay off in the New Year.
How can you be financially prepared for the holidays? What steps can you take to avoid insurmountable debt that could lead to personal bankruptcy?
Holiday Debt can ‘Snowball’
As the report notes, “debt accumulated during the holidays can stick around, and continue to snowball, well into the New Year.” Indeed, a recent study determined that Americans add more than $1,000, on average to their credit card debt during the holiday season. While that might not sound like a lot of money in the short term, if you already owe thousands of dollars in credit card debt, you could end up paying significantly more in the long run.
The study reported that “about half of those surveyed planned to chip away at their debt over more than four months or just make the minimum payments—which could extend the debt to 10 years or more and tack on nearly $400 in interest.” In other words, even going into debt by an additional $1,000 during the holidays can have long-term effects. What can you do to prevent holiday debt from snowballing?
Develop Strategies for Spending this Holiday Season
One of the keys to avoiding significant holiday debt is planning ahead for your spending limits. The following are some tips for Oak Park consumers to consider as Thanksgiving and the rest of the holiday season looms:
  • Determine how much you can spend ahead of time. This means looking at your monthly expenses, considering the amount leftover that you have to spend during the month, and then consider ways to economize. Write down the amount of money you have to spend during the holidays, and do your best to avoid going over that budget.
  • Make a list of people for whom you need to buy gifts. One of the first ways to avoid going beyond your holiday budget is to make a list of everyone that you plan to buy a gift for, and to determine the budget for gifts based on the amount of money you set aside.
  • Try to set aside money each week. If you typically buy three to four coffees at the local coffee shop each week, consider cutting back on coffee and saving that money for the holidays. It can add up.
  • Pay for gifts and other holiday items with cash (or your debit card) instead of using your credit card. By paying with the funds that you actually have now, you can avoid going into debt to buy gifts for others.
Seek Advice on Your Debt from a Consumer Protection Lawyer
Many Chicago residents are struggling with consumer debt. In some cases, filing for Chapter 7 or Chapter 13 bankruptcy may be able to help. An Oak Park consumer protection lawyer can discuss your options with you. Contact the Emerson Law Firm today to seek advice from an experienced advocate.
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