Help with Christmas gifts might be on your mind right now, especially if you are living on a low income. Free non-profit programs, like the Momentum Savings Challenge, can help you to feel less stressed about presents (did we mention there’s a cash bonus for signing up?) but understanding how to reduce debt will benefit your finances in the long term. Whether you’re a single mom, or a family living on a low income, we could all use some help to avoid more holiday debt!
Read on to learn how to avoid taking on more holiday debt and begin the process of getting out of debt after the holidays.
It’s Never Too Late To Take Control of Holiday Debt
With advertised sales and temptation starting as early as September, it’s no wonder the average person spends more than they should during the holidays. If your credit card balance has started to put on some early Christmas spending bulge and you are worried you won’t be able to pay that off until well into 2022, it’s time to stop the extra spending. Here’s some helpful tips:
- Leave your credit cards at home. Pay for all your remaining purchases with cash. You might not be reducing your holiday debt, but at least it’s not growing.
- Make a shopping list before you head out and stick to it. Take only enough cash with you to buy what is on your list as a way to exercise self-control.
- Set aside an “emergencies only” savings fund that you won’t be tempted to spend. The free QUBER savings app can be a helpful tool for this, plus you get cash bonuses for reaching your saving goals.
When you don’t pay your credit card balance in full each month, using credit cards to pay for new purchases greatly increases the cost of everything you buy. It will take you 64 months to pay off just $400 in extra spending when making only the minimum payment and you will end up paying $238 in interest. That just increased your Christmas gifts bill from $400 to $638! For that reason, try to pay more than the minimum payment each month.
Financial Recovery After the Holidays
If you are still paying off your holiday debts well into the New Year know that you are not alone. Bankruptcies in Canada rise every year in February and March. Part of this is because families make it through the holidays only to find themselves facing credit card bills they can’t pay. To reduce your holiday debt as quickly as possible:
- Pay as much as you can towards that debt and pay often, preferably more than the minimum payment. Because credit card companies charge interest on your daily balance, the more often you pay the faster you can get out of debt. So it’s better to put $25 a week against your card than to wait until the due date and pay $100.
- If you owe on more than one card, pay off the card with the highest interest rate first. But be sure to make the minimum payments on your other cards so you don’t get hit with late payment charges and other penalties. Once the first card is paid off, move on to the next.
- Try the free Momentum Savings Challenge on the QUBER app. Use the app to set aside $40 every month, then use your savings and rewards for debt repayment, if needed.
For More Help with Christmas Debt, Contact a Professional
If you are barely keeping up with the minimum payments, and can’t find enough money in your budget to pay down your balances it may be best to talk to a professional like a bankruptcy trustee. They can assist with options to deal with your debt.
No matter what, use your experiences as a lesson for next year. Make a budget early based on what you expect to buy and start putting aside some money now. If you are going to spend $500, put aside $40 a month starting in January. By the end of our savings challenge, you’ll have funds set aside to help make next Christmas both stress free, and debt free.
The Momentum Savings Challenge is Calgary’s only app-based rewards program for savers living on low incomes. We help you to set aside $40 each month by offering rewards for building the saving habit. Stop at any time, but the longer you save the more you could earn (up to $100 over ten months). This challenge is open to families and individuals living on low incomes only. Join the Momentum Savings Challenge on the QUBER app and feel more prepared for Christmas!