A Debt Free New Year

During the holidays, presents, travel and time off usually add up to a little credit card debt—or a lot. Most holiday shoppers actively seek out sales, clip coupons and do their best to mind their money during this easy-to-overspend season. So why does debt happen every year?

“The simplest answer to this question is consumerism,” says Lindsay McKeown, marketing specialist for Campus USA Credit Union. “With the increased advertising opportunities big companies use to reach consumers—including organic audiences through social media—combined with the consumer mindset, people are driven to buy as much as possible. Without a plan and set budget for gift buying during the holiday season, it is very easy to get carried away. The purchases can add up very quickly!”

If your credit cards have a bit of a holiday hangover, experts usually advise to pay off the debt with the highest interest rate first.

“I have also advised members to pay off smaller balances in the beginning to help get the momentum going. Having fewer accounts to worry about can be easier to manage, as well,” McKeown explains. She recommends paying down “unsecured, revolving” debt first, which includes credit cards. “These accounts can have a great impact on your credit score if you are close to your credit limit or are carrying the debt from month to month.”

Also know that there are financial options to help change how you pay debt.

“We often suggest converting revolving debt into a debt consolidation loan, if possible. Debt consolidation loans can be very helpful in paying off debt faster along with helping a borrower’s credit rating. Installment loans help your credit more than revolving debt (like credit cards and lines of credit), often offers a lower interest rate and has a set number of payments until the debt is paid in full,” she explains.

A simple way to divert more money to paying off any debt is to slash unnecessary spending, which includes “eating out at restaurants, specialty coffee drinks and services you can do yourself like lawn maintenance, going to nail salons, using shopping apps like Shipt, etc,” says McKeown.

Once debts are paid down, how can holiday lovers set themselves up for responsible shopping next year? Budget, then look for ways to automate saving through your bank so it’s out of your hands.

“Set a goal for the amount of money you plan on spending on your family and friends. Once you have that dollar amount, determine how much you need to save each month to reach your goal. Campus USA offers savings accounts that can help you save for holidays and vacations, and members can set up automatic deposits to make saving easier.”

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