We’ve been warned to keep from piling up debt during the holidays and now comes the moment of truth. Have you succeeded the challenge or did you fall flat on your face?
January brings in a lot of new beginnings and a chance to correct the wrong ways of the past. But that also means it brings with it the consequences. Part of that are the holiday debts that you accumulated last year.
The season brought us a lot of joyful gift exchanges and while it made the expense all the more worth it, that does not mean it erases the responsibility. You still have to pay it off. Although you got a lot of gifts in the previous weeks, unfortunately, your income did not increase with it. That means you will have to live with a tight budget in the next few months.
Reality sinks in as people start to repay debt
Before we can analyze the reality of holiday debts during the first month of the year, let us see how we fared last season. Most of our spending were on gifts. After all, it is the gift giving season. The other expenses includes the food for the feasts that we had to sponsor and any trips that were part of the holidays (vacations, visit to grandparents, etc.)
The forecast of the National Retail Federation (NRF) hints that people are bound to be in some form of debt. According to them, they expected an increase of 3.9% in the spending – a whopping $602.1 billion. Whether this forecast became true or not, remains to be seen. NRF mentioned that this increase already took into consideration the financial issues that happened back in October (government shutdown and debt ceiling).
In the same release in the NRF site, they mentioned that Shop.org was also optimistic with their sales come November and December. Their expected growth is within the range of 13%-15% – as more people are expected to make more online shopping.
All of these may seem contradictory but here are more news from AOL.com. The news website compiled a couple of statistics that says a lot about consumer spending that could have led to this years holiday debts.
2013 Black Friday sales went beyond a billions dollars worth of spending for American consumers. The total amount is actually $1.2 billion – which is an increase of 15% compared to last year.
57% of parents were reported to allow themselves to be in debt just so they can buy their children some gifts. Those who have to live on $35,000 a year are willing to be in $700 worth of debt. Those earning $75,000 are only willing to have $300 in credit.
36% of consumers think that buying gifts is more important than adhering to a budget.
31% of holiday shoppers did not set a spending limit.
As of September, 55% of Americans have not yet saved for the holiday season.
All of these indicate that consumers did not really prepare for the holiday spending and they are not averse to the idea of being in debt for it. This could mean that there will be an increase to consumers looking for debt relief options when January comes in.
Hire a credit counselor to start getting over debt from the holidays
Hopefully, your holiday debts have not led to your declaration of bankruptcy. We hope that you were not this reckless. But regardless of how you good or bad you were during the holidays, one thing is for sure – you will benefit from the services of a credit counselor. They can really help you avoid sinking in debt so you might want to put your finances in their hands – at least momentarily.
The great thing about credit counseling is they are mostly free. Usually, one visit is all it takes. And in almost all debt relief programs, the first consultation is free of charge. If you can get professional advice for free, why pass it up?
There are many benefits to getting the aid of a credit counselor – especially if you want to deal with your holiday debts immediately.
Maintain your good credit score. Your creditors will not care and will even appreciate the fact that you went to a credit counselor. It shows that you know your responsibility with your debts and it will not prompt them to report you to the credit bureaus for bad credit behavior. With a higher debt amount, your credit score would have gone down already. Opting for credit counseling will keep you from making it worse.
Helps you create a repayment plan. The credit counselor will help you create a payment plan that your finances can handle. In most cases, this is the main reason why you got in touch with them in the first place.
Provides you with free personal finance advice. One of the perks of this debt relief program is getting free financial advice. Not only will they help you get out of debt, they will also help you stay out of it. The two go hand in hand when you are getting over a debt situation.
Credit counseling is such a useful debt relief program that it is something that the bankruptcy court wants consumers to go through before finalizing their petition to go bankrupt. You can go through the traditional credit counseling sessions that happen face to face. Or, you can go online to look for a company that can help you out. Of course, you have to be careful about giving away your information. Make sure that you only go for legitimate credit counseling agencies.
To find out if they are legit, you want to look at their affiliations and accreditations. No reputable organization will include a scammer as one of their members. Not only that, it will give you an idea about the type of service that they have. You will know what type of training they have simply by looking at the qualifications of these organizations. All members are required to qualify so you can be assured that the agency you are looking into have these qualities – maybe even more.
As you go through credit counseling, make sure you pick up the right habits and lessons that will keep you from holiday debts next December. Preparing for it ahead of time will not only ease the burden of saving, it will also help you stay out of debt.
Imagine this, if you start saving up starting January, you only have to save up $70 to come up with $700 by October. That should give you enough time to shop around for the best deals. You do not have to worry about running out of time. $70 a month is a small price to pay for the savings that you will get out of the interest on your holiday debts. You can make sacrifice a couple of Starbucks lattes or a movie date. You can bundle your subscriptions at home to have the money to put aside for your future gifts buying spree.
This way, you will have the funds on hand when you find a good deal even in the mid year. Imagine completing your Christmas shopping without battling the holiday crowd. That in itself is a priceless gift.