Seven Ways to Reduce Holiday Debt and Raise Your Savings

holiday gifting

Seven Ways to Reduce Holiday Debt and Raise Your Savings

You may improve your financial situation in the new year and improve your quality of sleep by taking a few easy actions.

If you recently overspent on holiday-related items and activities, you are not alone. The National Retail Federation forecasted that winter holiday sales will reach up to $960 billion in 2022, an increase of 8% from 2021. (NRF).

You probably have aspirations of paying off credit cards and increasing your savings if you’re starting the new year with more debt and less money saved. These are typical financial resolutions for 2023 when Americans are hoping to improve their financial situation and inflation is predicted to reach levels unseen in decades.

Fortunately, making a few simple adjustments can help you get better sleep and financial stability.

Create a budget and savings strategy.

Effective money management requires knowing how much money comes in and goes out each month. Using a spreadsheet, a pen and paper, or a budgeting tool, make a list of your monthly income and expenses. Find strategies to save money, such as cutting back on eating out, canceling subscriptions you don’t use, or looking for more reasonable auto insurance. Transferring money from spending categories into those that can be saved or used to pay off debt is possible.

Find the most advantageous savings account.

Since a savings account provides easy access to money when you need it, it’s a great choice for an emergency fund. All savings accounts, however, are not created equal because interest rates can vary greatly between banks. While many big banks provide annual percentage yields (APYs) that are significantly below the national average, certain online banks and credit unions provide yields that are significantly higher.

Organize your savings by objectives.

With the aid of some banks and credit unions, you can save money by designating a portion of your funds to specific uses. You might utilise this technique to create a special Christmas shopping fund to prevent going into debt during the upcoming holiday season.

Plan your credit card repayments.

Due to purchases for the holidays or other expenses, you may have accumulated balances on a number of credit cards. One of the various strategies for paying off such debt is the avalanche approach, which comprises paying off the credit card with the highest interest rate first and continuing with the process until all your commitments are paid off. One advantage of this approach is that you pay off the obligations with the highest interest rates first.

Transfer your credit card balance.

By moving their amount to a card with a low or no interest rate, individuals can minimize their credit card debt, according to Heritage. Transferring a balance to a card with a 0% introductory rate will allow you to pay it off without paying any further interest.

These balance transfers are advantageous for anyone who needs more time to pay off high-interest debt. Top-rated debt transfer credit cards typically accessible to consumers with outstanding or exceptional credit ratings, with lengthy initial low-interest or interest-free periods

Limit your use of credit cards.

Reconsider your credit card usage whether you’re trying to avoid debt or are paying off an amount on one. Don’t charge more than you can pay back in full when the bill comes to avoid being charged with high-interest rates. One way to reduce the cost of your credit card is to stop paying the monthly fees for clubs, memberships, and other services you don’t use.

Your budget’s resources can be used to pay off the balance more quickly if you lower your monthly credit card expenses.

Utilize windfalls

It can be tempting to take a trip or shop when you receive a financial windfall like a tax refund, work bonus, or inheritance. Consider saving money or paying off debt with some or all of the money instead.

Set aside funds from a financial windfall for holiday-related expenses. This can help you avoid accumulating credit card debt when you’re ready to start spending money on things like gifts, parties, or trips around the holidays. 

In summary

Many people find it simple to rack up debt throughout the holiday season. However, putting these practical suggestions into practice will assist you in lowering your credit card debt and growing your savings.

The tax laws are very complex. Our short blog articles cannot cover in full all the nuances of the rules. Your specific facts may hold various opportunities and possible risks that only trained, experienced, and highly qualified tax specialists can spot. We encourage you to find such help, rather than trying to figure it all out on your own. Consider giving this marketplace a try by posting your project and signing up here.

If you are a licensed tax professional interested in helping others either part or full-time, or ad hoc, come on in! Happy to have you. Our marketplace has the full suite of tools to communicate with clients including compliance calendars, task and message management, and billing. You can also quickly connect to knowledgeable colleagues who can complement your services with the ones you do not provide. Register here.

Team iFindTaxPro

Team iFindTaxPro

Leave a Reply

Your email address will not be published.Required fields are marked *

related