For a variety of reasons many Albertans experience a credit hangover in January. Here are some tips on paying off the balance.
Redirect Money from Costly Habits
When paying off credit cards, every dollar counts. Take a look at your spending habits and determine which ones can be let go. Use the money you would spend on those habits to pay down your balance. For example, the daily coffee run to Starbucks, paying for subscription services or streaming that you no longer use (or consider dropping down a tier on these services), TV packages that can be reduced, lottery tickets, magazine subscriptions (go digital or check out Hoopla – it’s free with your library card), etc.
Be Aware of the Interest
Just paying the minimum balance is not going to make any headway. The interest will eat up the payment and in the long run, you’ll pay more far more for your items than intended. Learn how to calculate how much interest you will pay on your purchases and set yourself a new minimum balance – one that will reduce the total amount within a reasonable timeframe.
High interest makes it very difficult to pay off a large balance. Consider moving the balance to a low interest card so you can pay it off faster.
The Snowball Method
The snowball, or rollover, method is a longstanding solution for debt relief. This means paying off the small debts as fast as possible, then rolling that payment onto the next largest debt, and so on. There are many snowball calculators online that will help you with this method.
If the Christmas debt comes on top of an already unmanageable debt load, it may be time to seek help. The stress of debt can affect mental health and relationships. If you are up late at night with money worries or fighting with friends and family about money, reach out for help. Non-profit credit counselling and debt consolidation organizations such as Money Mentors offer advice and a path forward. Also consider therapy to address underlying issues that drive excess spending, or to help mend relationships.
The holidays are wonderful time to spend with friends and family, but money worries can turn January into a very stressful month. This year, if your credit card balance is too high, take action and control. Help is available.