Here is How to Bounce Back from Increased Holiday Debt in the New Year
Kriben Reddy, vice president at TransUnion Consumer
Most of us tend to overspend during the holiday season, and blow our budget in the process. If not, chances are that your finances might simply be under strain as a result of COVID-19 and the tough economic conditions. Here are a few tips on how to restore your credit health in 2021.
Face your finances head-on
Don’t avoid your bank, credit card and store card statements. It’s vital that you find out where you stand as quickly as possible. Go through your statements line-by-line to make sure there aren’t any mistakes. Then, once you know the size of your debt, you can start making plans to tackle it.
Stop your debt from getting out of control
Once you know how much you’re in for, your aim is to pay off the debt as quickly as possible. Step 1: curb unnecessary spends you can’t afford. Now create a line in your budget specifically for debt repayments. Remember, the aim is to pay off more than the minimum amount each month to reduce interest charges. Don’t have a budget? Now is the time to start.
Consolidate your debt
If you’ve really overdone it and have a lot of short-term debt that you’ll battle to pay every month, you may be able to get some relief by consolidating it all into a single personal loan, with a lower interest rate. Talk to your bank to help you in this regard.
Make sure you plan better
To avoid stressing out again at the end of the year, start planning now to avoid a repeat next holiday season. Work out how much you spent in total over the holidays, and how much you expect to spend at the end of the year. If you can, start saving a bit each month now. If not, stick to your budget like never before. Your stress levels will thank you in 12 months’ time!
Request a copy of your credit report
Your credit report can give you a good indication of how good you are at paying your monthly bills and debts. Get your free credit report from TransUnion today, and take control of your credit profile so you can achieve your financial goals.