Topic: Paying Off Debt After Holiday Spending
A: The first step is to assess your total financial situation, including your monthly budget and your short and long term financial goals. List out all of your debts, their due dates, payment amounts, interest rates and how soon you want to pay those debts off in.
Q: Which debts are best to focus on first?
A: Consider paying down the cards with the highest interest rates first. If that seems too difficult, try paying down your smallest balance first so you can see your progress right away. Also, anytime you can pay more than the minimum payment you should do so.
Q: What if you spent a little too much last year and can’t afford to pay everything back?
A: Well, you can always use your tax return, if you receive one, to pay off or pay down your debts. You may want to also consider a debt consolidation loan.
Q: What’s a debt consolidation loan?
A: A consolidation loan is when you combine all of your debt into one loan, which allows you to make one monthly payment instead of many. Also, these types of loans have terms, so you will know when the debt will be paid off vs a credit card which can keep changing based on your usage.