Debt Free – Utopia millions are starting the New Year with

Hope it was fun while it lasted… Now that the bills are arriving reality is starting to set in as thoughts are turning towards the bitter sweet of having to pay for the fun.

Year after year Christmas has become a grander commercial feast for vendors and credit card companies. Advertising is making sure that everyone gets into the frenzy of buying, usually using plastic, with vague thoughts of what trouble may be looming ahead.

By John Hielscher of Herald Tribune in his article “Be Ready When Big Holiday Bills Roll In”:

“Most people spread out their holiday purchases over four or five credit cards,” he said. “By the time the holiday season is over, they have no idea what they spent, which is a huge problem. “Some 26 percent of Americans use credit cards most often when holiday shopping, pumping up the $63.6 billion charged on credit cards throughout the shopping season, according to a poll by Consumer Reports magazine.

Twenty-three percent of those shoppers say they won’t pay off their debt until March or later.

“Credit cards can be hazardous to your holiday season,” said Tod Marks, senior editor at Consumer Reports.

“With the average household saddled with $9,000 in credit debt already, anything that significantly adds to that impost could be potentially devastating,” he said.

Those who used credit cards said they planned to charge more than $1,000 for holiday gifts this year.

In its latest survey, Consolidated Credit found that 44 percent of shoppers are still paying off debts from last year’s holiday season.

This year, 30 percent say they plan to pay off their holiday debt within three months, and 25 percent expect to be done within 12 months.

Fifteen percent say they can pay off their debt in a lump sum, while 30 percent say they aren’t concerned about paying off that debt.

Estimates varied on how much shoppers would spend at Christmastime.
The National Retail Federation projected the average consumer spending $791.10 in the recent holiday season, up from $738.11 in 2005. Shoppers also would spend nearly $100 on themselves.

“What happens is that people tend to view credit cards not as money — ‘I can buy something and pay for it later.’ When that gets out of hand, it can really be a problem for the individual.

“The rule of thumb is if it takes you more than three equal payments to pay off a credit card, then you could have a credit card problem,” he said.

Buying a big-ticket item on credit also can become a big long-term expense. Say you bought an entertainment system for $5,000 with a credit card. At 18 percent interest, and making only the minimum payment each month, it will take 33 years to wipe out the debt, which over time will total $12,000.”

                                                                *  *  *

Here are some suggestions of what you could do now.  Even more so, how you can start planning for the future so that the new year and all the years to come, as well as the next holiday seasons, will be much easier for you to handle financially.

Some recommendations

For those who overspent during the holidays, the experts have a number of recommendations to get you through.

First, sit down and figure out exactly how much you owe. Review all charge cards to come up with your total debt.

Track your other expenses. Some debt counselors suggest carrying a notebook to write down every single expense for a month, including that cup of coffee or pack of gum.

Create a budget. Balance your income with your monthly expenses, and what’s left can be used to pay credit card debt.

Pay more than the minimum balance on cards if possible. Doubling the minimum, usually 2 percent of the outstanding balance, will go a long way toward whittling down the debt.

                                                                *  *  *

Financial Planning might not be such a bad idea at this time… starting the year off with a very worthwhile project… especially when you can do it yourself for free with the help of Deborah Fowles. And, if you learn to make it an ongoing project, imagine what a difference it will make in your finances and your peace of mind.

Debby Fowles, B.S., is an author, accountant, freelance writer, and small business consultant with a passion for saving, investing, making the most of her money, and helping others to do the same.

She has prepared a five part Plan titled: “Guidance for Creating Your Own Personal Financial Plan”, which will be a great source to help you come up with a solid plan of your own. You can access the Plan at http://financialplan.about.com/od/personalfinancebasics/ss/FinancialPlan.htm

Aila Noake
Debt Relief Consultant
http://www.MyIntegrityDebtOptions.com
Get rid of your debt legally and ethically
and end your payments immediately.

.