Holiday Debt Cure

HOLIDAY DEBT CURES

By:  Steven P. Taylor, Attorney at Law

It is that holiday season again. A number of potential debt traps exist that could lead to long-term credit card bills for payment of holiday things such as Thanksgiving dinners and Christmas presents and the travel to each that we must pay for.

Black Friday has descended upon us; but the days that shoppers swarm the stores for deals and sales continues on. The holidays will come and go.  During this festive season,  it’s spend, spend, spend. Family and friends receive their gifts and are glowing with cheer, love and thankfulness. Somehow, we manage to scrape up the extra money–with just a little help from credit cards and overtime.

Then January comes, and with the unwelcome credit card bill requesting payments for the Yuletide cheer. Unfortunately, the house payment, car payment and utility payment that are due do not have grace periods that extend to your tax refund. The money has been spent on the gifts in your child’s room.

Soon, you are having heated phone conversations with creditors and utility companies.    The easiest way to avoid post holiday pain is to prepare. Below are a few tips on how your can avoid the holiday debt trap.

1. Set up the amount you are going to spend on the holidays in advance. Divide that number by 11 and set that amount back every month as your “holiday fund”. By Christmas time you have easily saved the amount needed for a stress fee holiday season.
2. Keep your holiday shopping to a minimal. Make a short list of the people you’re going to purchase gifts for and stick to it. Got a long list of friends and relatives? Still make a short list and send everyone else an inexpensive holiday card. Remember, the debt you take on could become your first steps towards new financial troubles, so be careful.
3. Use cash and avoid credit cards when making purchases. While credit card use may be “easy” and convenient when you’re holiday shopping, it can also be very expensive in the long-term. First of all, using a credit card will make you purchase more than you would if you were using cash. Second, it’s not likely that you will pay it all off before accruing interest. So avoid any credit card mess by leaving the plastic at home.
4. Liquidate assets. Sell unused clothes, shoes, books or other items that are collecting dust in storage. Be friends with E-Bay or garage sales. If it is in storage, you probably will never use them. It’s time to let go. Look for part-time side work. Every bit counts
5. Consider layaway plans. Layaway allows consumers to purchase items without paying for it first and still avoid debt. How it works? The consumer places their purchases in storage at the store while making payments on the purchases over time free of interest. Some stores do charge a small fee, which is nominal compared to the interest the post-bankruptcy debtor could rack up if they use a credit card for their holiday shopping.
6. The last resort should be credit cards. They are for you to borrow money short term you don’t have and usually carry with it a ridiculous APR. (Annual Percentage Rate. If you must use the credit option, use a low interest rate card and try to pay the balance in full at the end of the month so you are only paying back the exact amount you borrowed! Always know how you are going to repay the credit card in full in less than 2 months. Remember for Short Term Use only.
7. Of course, borrowers who do take on new holiday debt may be able to discharge that debt in Chapter 7 bankruptcy if they are unable to repay it. That being said, I hope you enjoy your holidays. Don’t let the stress of finances bog you down! Times are hard.

Happy Holidays!

Steven P. Taylor, sptaylor@bankruptcyoffice.net

Law Office of Steven P. Taylor PC

Serving Central and Northern Indiana

1-800-966-8447