Kimberly Palmer: How to tackle holiday debt in January
Debt from holiday spending and other end-of-year costs often comes due in January, and with rising interest rates, it's increasingly expensive
Rachel Kramer Bussel realized after years of being in debt that if she didn't take action, she would be in debt the rest of her life. Bussel, a freelancer writer from Atlantic City, New Jersey realized that this meant cutting back on spending and contributing any money to the principal. She says, "Starting to see the money go in the right directions helped me amp up it." "I felt like there was light at the end. Bussel's debt came from student loans, credit cards and back taxes. She finally paid all her debt in 2020. In January, bills for holiday shopping and other end of the year spending are due. This year, rising interest rates have made debt more expensive.
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The Federal Reserve reports that revolving debt (which includes credit card balances) continued to rise through 2022. It is important to look back at how the debt came about before you make a plan to repay it. She suggests that you examine the triggers that led to this debt and then take a moment to feel it. She adds, "Let's not berate ourself but be solution-focused." She says that skipping this introspective step can make a difficult task of taking action. It's easy to get stuck on past choices and not to think about the future.
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She recommends starting with the highest interest debt, also known as the "debt avalanche" method. Others prefer the "debt snowball" method where you look for money in your budget that can be used to pay down the debt. Luttrull suggests that student loan payments can be paused to allow you to use the money to pay off credit card debt. You can also look for lower-cost ways to socialize with friends, such as hosting game nights or going for a hike.Emma Johnson, founder of the website wealthysinglemommy.com, suggests combing through all of your banking and credit card statements to identify recurring costs you can immediately cut
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Popular targets include streaming services, gym memberships, and cable bills. Do a New Year's spring cleaning. She asks, "What can you adjust?" She asks. Cedric Nah, author of "Why Should White Guys Have All the Money?" Cedric Nash, author of 'Why Should White Guys Have All the Wealth?' and founder of Black Wealth Summit, believes that there are many options in today's tech-heavy world.
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You could become a computer technician if your technical skills are strong. If you're proficient in math, tutors can make over $100 an hour. Take a look at your skills and use them to reduce your debt and increase your wealth. "Nash," who is based out of St. Petersburg in Florida, said that his friends make side incomes by deejaying and hanging Christmas lights.
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Consider applying for a personal loan that has a lower interest rate than your credit cards. Nash suggests that if you have good credit, you might be able to lower the interest cost by transferring the balance to either a 0% personal loan or credit card with a lower rate of interest. We need to reward ourselves for achieving milestones, such as paying off a credit card. It could be a trip, or a purchase that is long overdue, as long as it doesn't increase your debt. Johnson recommends creating new traditions to keep debt at bay. Johnson writes custom love poems for her children instead of Valentine's Day gifts. It's meaningful and they want it now.
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This content is intended for informational and educational purposes only and does not constitute investment advice. Kimberly Palmer, a personal finance expert at NerdWallet, is the author of Smart Mom, Rich Mom. Email: EMAIL
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