They are just starting to trickle in, those holiday bills. It turns out you not only took in too many calories, you also dug into your wallet too many times. If only those holiday pounds came off as quickly as the cash flies out of your account. If gaining control of your finances was a New Year's resolution, you are not alone.
"One of the most important things to do is sit down and get a grasp of what your expenses are monthly. Set yourself up on a payment plan, a budget, so you know how much you are paying out each and every month," said Virginia Garretson, vice president of the Eastern Division of Money Management International, also known as American Credit Counselors or Consumer Credit Counseling in Roanoke, Va.
Garretson said that for things such as car insurance, car inspections and maintenance, taxes and birthdays, plan now and set aside money each month to prepare for those expenses. She said being aware of your situation and taking steps to prepare for expenses you know are coming will help you get out and stay out of debt. If you think you cannot make a budget on your own, American Credit Counselors will help you at no charge.
"Using credit cards is fine as long as you're using them out of convenience, not necessity," Garretson said. "If you have to use them because it's necessary because of an emergency and you have an idea of what your expenses are and you've started saving -- maybe you haven't saved all the money you need, but you have some money to put toward it -- it doesn't hurt as much."
That is not what most people do, especially during the holiday season. That's why January and February are the busiest months for credit counselors.
"That's basically because people have gone out and overloaded themselves at Christmas," Garretson added. "They find they can't meet their bills, and they come to us to work out a payment plan. It's basically because they just don't prepare themselves."
"In most cases, people do not keep a record of what they are charging. They just keep charging, especially at Christmastime, because we like to do everything we can for our loved ones at Christmas," Garretson continued. "That's dangerous because we really don't know what Christmas has cost us until the bills start rolling in."
If that describes your Christmas spending experience, here's what Garretson suggests you do after you have determined your monthly expenses.
Pay your mortgage or rent, utilities and insurance, the things that are necessary for you to live. Then focus your attention on those credit card bills.
"Pay the bill in full if you can to avoid interest charges. If that's not possible, try to pay more than the minimum payment because if you only pay the minimum, most of that will be eaten up by interest. You'll be paying that bill for years."
Suppose you have several cards to pay. Garretson suggests paying off the one with the highest interest rate first and make the minimum payments on the others.
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