Retailers agree that this past holiday shopping season was better than the previous year. However, as the U.S. economy improved, the influx of post holiday bills also may be a lot worse than past years.
The main question for a lot of consumers now is: “How can you pay them off as painlessly as possible?”
Howard Dworkin of Consolidated Credit confirms that a few years ago most people stopped using their credit cards, but this season he says, “Boy, they spent like banshees.”
According to the National Retail Federation, 2012 holiday spending went up about 10 percent from the previous year to the tune of $28 billion and unless you paid cash all those bills are coming due soon.
“Unfortunately, now it’s time to pay the piper,”Dworkin said.
Doral’s Vivian Elesppe already is trying to figure out how to pay off her growing holiday bills, “I have to readjust; pay a little less; find a way to budget better, and cut costs somewhere,” she said.
What’s making it even harder? Like everyone else, her take home pay is less than last year’s because of higher payroll taxes.
So how do we cut costs and pay off the credit cards?
Coral Gables financial planner Lane Jones of Evensky & Katz said it may make sense temporarily to reduce savings plans and use the extra take-home pay to accelerate paying off high credit card debt.
“You can always evaluate what you’re deducting into your 401k,” Jones suggested. “I always hate to tell people to cut back their savings, but that’s one way to do it.”
Need some more ideas?
Go through your bills and cut back all unnecessary expenses — like dining out or all those premium cable channels you may never watch.
Check your credit cards and pay off the highest interest rates first. Try to use cash rather than credit as much as possible, and don’t get trapped into thinking you can just make the minimum payments.
“If you want to be in debt the rest of your life, just pay the recommended payments,” Dworkin warns, “If you do, you’ll never get out of debt. It could take you 10 to 25 years.”
Home mortgages are at all-time low rates. If you can refinance and save money on your monthly payments, the extra cash can go towards paying off holiday bills.
Need one last idea?
Now is a great time to start a so-called “Christmas Club” savings account for the 2013 holiday season.
Want some more budget strategies? Just check out this link from the Federal Trade Commission on “66 Ways to Save Money.”
Or check these links for more Home Budgeting Help: www.bankrate.com/calculators/smart-spending/home-budgetplancalculator.aspx or www.ftc.gov/bcp/edu/microsites/moneymatters/managing-your-budget.shtml.
Watch Al Sunshine’s “Money Watch” reports Monday-Friday on CBS4. You may find Al’s blog at www.cbs4.com/category/blogs/al-sunshine.