A recent survey conducted by MagnifyMoney found consumers who took on debt this holiday season will start the New Year with an average of $1,003 in credit card debt. Last-minute gifts, entertaining costs, and fewer hours at work, can all add up to additional credit card debt.
What is troubling about this year’s findings is that the majority of consumers who went into debt did not plan on it. The vast majority (65.2%) of consumers who took on the debt did so unexpectedly and did not budget for the added expense.
Nearly half (46%) predict they will need four months or more to pay off their holiday debt, or will only make the minimum monthly payments.
Even a seemingly modest amount of debt can quickly balloon over time if not paid in full timely. A person carrying an average debt load of $1,003 who makes one $25 minimum payment per month would need 58 months (4.8 years) to pay off their debt. That calculation assumes an average annual percentage rate (APR) of 16%.
Here are some ways to beat the holiday debt cycle:
Understand where your money went. Track exactly where your money went the last three months. There are useful apps that can help you understand where your money has gone. LevelMoney splits your expenditure into fixed, recurring expenses and variable expenses.
Carefully review your credit report. You can download your report for free at AnnualCreditReport.com for all three bureaus.
Use the debt snowball method. A recent study found that consumers are more likely to stick to paying off debt when paying off credit cards with the smallest balances, first. This strategy provides consumers with small “wins” against debt and builds momentum to keep you motivated.
Make 2018 your year to be debt free! By taking the right approach and building good financial habits, you can successfully pay down debt in the New Year. Here are some ways to keep to your New Year’s Debt Resolutions. If holiday expenditures have put you over the limit financially, it might be time to examine your finances in closer detail and meet with a financial advisor or bankruptcy attorney. Here are some signs you should file for bankruptcy.
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If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.