Every year, it seems that the frenzy and pressure to buy Christmas gifts escalates. This year, in early September, stores in our area were setting up Christmas decorations and playing Christmas music. I’ve had years, especially when I was younger and more impressionable, when I succumbed to this pressure and spent more than I had available for Christmas gifts. When it was all over on December 26, I had a holiday spending hangover and was panicked. How was I going to pay off this holiday debt? I certainly didn’t want it lingering for months!
Whether you have holiday gift giving debt to pay off or you just have debt from the rest of the year, there are a number of strategies you can use to accelerate eliminating those balances!
Lower Your Credit Card Interest Rates
Interest rates are going up again soon, which means if you have a credit card with a variable APR, you’ll soon be paying more in interest, which makes paying down debt harder. One way you can combat this is to call the credit card company and ask to have your interest rate lowered.
I have done this in the past with mixed success. I usually remind the credit card company that I’m a long-term customer in good standing and that I’m trying to make more progress on paying down my debt. I kindly ask if they’ll lower my interest rate. Sometimes, I have success at that point. Other times, I don’t. If I don’t have success, I’ll ask to speak to the manager. Sometimes I have success, though not always in the ways that I planned. One time, US Bank offered to instead give me 10,000 points, which gave me $100 cash back that I applied to my balance.
If you have no success with the initial customer service rep or the manager, thank them for their time, and then end the call. Call back a few days later and try again. After that call, if you still have no luck, give up. A 50% success rate is normal, so if one card says no, but the other card company reduces your interest rate by 2%, you’ve been successful.
Make Payments as Soon as You Can
Many people pay their credit card bill once a month, but if you’re carrying a balance, you can make more progress paying off debt if you pay as soon as you have money available. Let’s say you can pay $200 a month on your credit card, and you’re paid on the 15th and the 30th. Each paycheck, take $100 for your payment and apply it immediately. By doing this, you’ll be paying a little less interest overall. When you make the $100 payment on the 15th, you’ll lower the balance on the card, and, therefore, the interest that you pay. That means on the 30th when you pay your card, you won’t have accrued interest on $100 of the balance you previously had because you already paid that off two weeks earlier. Every bit less interest that you pay means more money can go on the principal, lowering your overall balance.
Transfer Your Balance to a Zero APR Card
If your credit is good, consider getting a 0% APR credit card and transferring the balance from a high APR card to there. Keep in mind, you’ll need to pay a transfer fee, typically 3 to 5% of the total transfer, so if you’re transferring $10,000, you’ll pay a $300 to $500 transfer fee, which is steep, but often that’s much lower than you’ll pay in interest on a high APR card. Also, the 0% APR is only good for a limited time, usually 12 to 21 months. After that, the APR will be standard for the card.
Call Your Utilities to Negotiate Your Charges
You can also call some of your utility companies to negotiate the rates that you pay. I’ve had good luck with negotiating down the price of my Internet, often by $20 to $30 a month, and the deal is good for one year. I use that extra money to pay more on my credit card bills.
A family friend negotiated how much she paid for her garbage service and got a 10% discount for a year. It doesn’t hurt to call the company and ask for a discount. The worst that they can say is no. If you do get the discount, the difference in what you now have to pay can be funneled on to your credit card balances.
Use Up the Food You Have
Groceries are often the second largest household expense behind rent or mortgage payments. You can reduce the price that you pay for groceries by using apps that help you find creative ways to use up what you have in the house.
One easy way is to simply Google the ingredients that you have and the word “recipes,” so, for example, “Green bean and chicken recipes.” Doing that, I found results for “Italian Green Bean Chicken” and “Chicken, Stuffing, and Green Bean Casserole, ”to name a few. Who knows, you might find some recipes you enjoy, and you’ve saved money.
The website MyFridgeFood.com allows you to enter what ingredients you have and then produces many recipes for those items. Using just the basics of our pantry, the site produced four pages of recipes that I could make!
If you use up what you have, you could easily save $25 to $200 off your monthly grocery bill. Put that money on your credit card debt, and next month, when the principal is lower, you’ll be paying less in interest!
Take on Extra Jobs
We all like our time to relax and unwind, but if you have debt hanging over your head and you’re paying hundreds in interest every month, that’s not relaxing. One way to pay down debt more quickly is to take an extra job or two. One of my friends started babysitting as a way to make extra cash. When I was working full-time, I took overtime whenever it was available. Now that I work from home, I find extra jobs for a few months if I have some debt that I’d like to erase quickly.
There are many things you can do to make extra money depending on your interests. For years, every November and December my mom made Pumpkin Rolls and sold them to family and friends. They either ate the Pumpkin Rolls themselves, or they gave them out as gifts for their family or friends. My mom made about $500 to $600 every holiday season.
Conclusions
If you’re facing residual holiday debt, the worst thing you can do is only pay the minimum payment. The more you can pay, the quicker you’ll get out of debt. Take action now. You’ll likely find that a few hours spent calling companies to reduce your interest rates and payments and applying for 0% APR cards will save you up to hundreds of dollars.
