The biggest news this week is all about the pull-back from the fiscal cliff and the debt hangover that may be awaiting many consumers after shopping too much this holiday season.
You might have been searching for hangover cures a few days ago, but we have some simple strategies to help you get out of a different sort of hangover — a debt hangover. Shopping during the holiday season means some cardholders spend more than they can pay off when their credit card statement arrives in January. That’s when the hangover kicks in.
Jeanne Kelly gives four helpful solutions you can employ now to limit the damage a debt hangover can cause. One of our favorites is to create a “pay-those-Christmas-bills-ASAP” budget that forces you to cut back on other expenses in order to pay off your holiday splurges within one credit card statement. It may not be easy, but with the possibility of penalty APRs and compounding interest if you make minimum or late payments, it’s a stitch in time to save nine.
The fiscal cliff has been averted, but Americans may not be too happy about some of the concessions both sides of the aisle had to make to get the deal done.
To start, the payroll tax cut instated in 2011 that lowered the rate to 4.2 percent from 6.2 percent went back into effect on Monday. That means, according to CNN, that those making a $30,000 salary will find their monthly paycheck to be $50 lighter. This was seen as a concession by many Democrats.
Republicans also saw a concession in their permanent extension of the Bush-era tax cuts for those making less than $400,000 a year, or $450,00 for a couple’s yearly income. Many from the GOP stated recently that the tax cuts should remain in place for those making up to $1 million.
This time of year tends to be when people promise to buckle down on their finances to earn more and spend less in 2013. But how do you do it?
Gerri Detweiler is a debt expert, and she broke down the five major ways you can start tackling your debt in the new year, some that you can accomplish on your own and some that require the help of others. One of our favorites is loan consolidation. This technique entails getting a personal loan with a lower interest rate than your credit cards. You then can pay off the credit cards immediately, avoiding the higher interest rate and giving yourself some extra breathing room in your budget while you pay off the personal loan. The other upside to this tactic is that you can turn multiple monthly bills into just one payment, making the paperwork less complex.
Image: NS Newsflash, via Flickr