Have you gotten the statements for all of your Christmas shopping yet? Probably not, or at least not all of the shopping you will be doing. After all, we are still 3 weeks from Christmas. PLENTY of time to get the shopping done. But back to those bills that will be coming….
According to research compiled by CreditCards.com, 61% of those who already carry a balance on their credit cards will extend their debt over the Holidays. Another article of theirs reports that about 37% of Americans regularly carry debt on their credit cards.
I won’t bore you with all of the math, but the numbers from these two articles tell us that 42-43% of American adults will put themselves into or further into credit card debt this year.
So have you started your payments yet?
I know, I know. You haven’t gotten the statements yet and aren’t even done shopping yet. But you should be making the payments in your head. After all, they will be coming and it’s better to be ready than surprised by the cold, hard reality of post-Christmas payments.
Let me point out my justification for thinking about this now. I used the minimum payment calculator at CreditCards.com and used a balance of $1000. You may put more or less than this on your credit card, but it’s an easy number to type in. I used an APR of 18%, which is about average, and a minimum payment of 3% or $25, whichever is greater. Again, this is pretty average.
I clicked the magic button and found out that it would take me 59 months to pay off this year’s Christmas debt. That’s right. I’ll be paying for this Christmas for the next FIVE Christmases. The interest will add another $497 to my payments. For all practical purposes, I will be paying half of my original balance in interest alone.
So what do you do about it? Well, here are a few steps to take.
- Write out your shopping plan. Who will you be buying for and how much will you be spending? Don’t forget things like travel costs, food costs, and those Christmas cards you will be mailing out that might actually make it to their destinations by New Year’s Day.
- Next, use your resources. Use the calculator mentioned above to find out what that spending is really going to cost you. They have other calculators that will work from slightly different angles if you like. Or find your own calculators elsewhere. Just use something to get informed. Your credit card statements will have minimum payment warnings on them that will give you all of this information, but they don’t do the math until after you have already spent the money. That may be too late.
- Finally, if you don’t like the numbers you are looking at, go back to your original spending list and start adjusting. Where can you make changes to your spending to keep things more manageable? What are the most important things on your list and what are some things you are willing to maybe even give up this year?
So maybe this isn’t entirely in the spirit of Christmas cheer. But Christmas is only two weeks away. Then what? How long will that cheer carry through when the bills start coming in?
I’m not saying give up your Christmas cheer. Rather, maybe you find your Christmas cheer in a little different way this year. That way, when it comes time for paying the Christmas bills, you will already know that you can manage them and be ready for Christmas next year rather than still be working on payments from this Christmas.
If credit card debt is overwhelming to you, the counselors at the Center for Financial Resources are here to help. We can help you look at your debt, your income, and your expenses to figure out a plan to tackle the debt you have. You can call us at 605-330-2700 or go to our website to schedule an appointment.
written by Breck Miller, Community Relations Coordinator
images courtesy freedigitalphotos.net
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