SAN JOSE, California, November 16, 2021 / PRNewswire / – Paying off debt can sometimes be a long and frustrating process. The average consumer should $ 5,315 in credit card debt. If you too are racking up a large amount of debt, you may feel better knowing that many other consumers are in a similar situation.
Whichever debt elimination strategy you choose, it will likely involve some sacrifice on your part. Maybe you’re giving up some of your free time to earn some extra cash through a part-time job or a side gig. Or you could say “no” to the purchases you would like to make in order to reduce your expenses.
Whether you’re making more money, spending less, or doing a combination of the two, vacations can introduce new obstacles in your credit card debt elimination journey. But you don’t have to let the fall and winter festivities get in the way.
Here are three tips that can help you if you’re trying to pay off your debt while on vacation, from myFICO.
For more information on loans and credit, visit the myFICO blog at https://www.myfico.com/credit-education/blog
1. Plan ahead
It is normal to have additional constraints on your budget in the last few months of the year. Depending on the holidays you observe, you might be used to making additional purchases for Halloween, Thanksgiving and Christmas, Hanukkah or other holidays.
You can always give yourself permission to enjoy the holidays. Even when you’re trying to pay off your debts, that doesn’t mean you can’t celebrate and participate in centuries-old traditions. However, you may need to make some financial adjustments along the way.
The first step in staying on track with your vacation debt repayment goals is to create a budget for the additional expenses that you will encounter. By creating a budget, you can control your spending and set aside funds to apply towards your debt elimination goals at the same time.
If your budget is already tight (and you can’t cut spending), you may need to limit your vacation budget. But it’s better to plan some expenses in advance rather than putting those purchases on a credit card that you’ll have to figure out how to pay for them (plus interest) later.
2. Look for ways to save
In addition to budgeting for vacation-related purchases, you can work to get more bang for your buck. There are plenty of ways to get creative with your cash while on vacation while still enjoying the season.
Below are some ideas to inspire you.
- Make good use of your credit card rewards. Do you have credit cards that allow you to earn rewards on your spending? The holidays can be a great time to redeem the cash back rewards or points you’ve accumulated throughout the year. Credit card rewards can be another way to pay for gifts, meals, and more, all without withdrawing funds from your debt elimination goals. (Tip: Try to pay off your entire credit card balance each month. Otherwise, the interest you pay could outweigh the value of the credit card rewards you earn.)
- Try the DIY approach. From handcrafted Halloween costumes to homemade holiday gifts, making items from scratch can often save you money and hold special meaning to those who receive them. If you can use the DIY approach to spend less, you may have more money to spend on your debt.
- Vacation without spending. Giving gifts during the holiday season can often be stressful, not only for you, but also for those close to you. So, it might be worth considering the gift of not giving during the next holiday season. When you and your loved ones collectively remove the obligation to give gifts (or find an alternative approach that works for you), it could take the financial pressure off and help everyone enjoy the season even more.
If you find ways to enjoy the vacation with less money than you put aside in your budget, that’s a bonus. Then you could redirect the unused vacation funds to your debt repayment efforts.
3. Take advantage of the bonuses
During the holidays, there may be times when you receive extra cash, gift cards, gift certificates, etc. Some employers offer vacation or year-end bonuses that could help increase your budget. Or maybe you have students, relatives, or clients who give you that little extra something this time of year.
If you’re lucky enough to receive an extra bonus, consider putting at least some of that money toward your financial benefit. Sure, it can be fun to take a trip or make a big purchase when you get an extra rush of cash. But keeping the momentum on your debt repayment journey could be even more satisfying in the long run.
Paying off debt can be a wise use of your financial resources. By eliminating debt, especially credit card balances, you can save money on interest and reduce pressure on your monthly budget. If you lower your credit utilization rate, you might even improve your FICO® score as a bonus.
It’s understandable that you want to slow down your debt repayment efforts during the holiday season. But try not to fully apply the brakes. Remember, every dollar of high interest debt you pay off can be a step in the right financial direction.
myFICO makes it easier to understand your credit with FICO® Scores, credit reports and alerts from the 3 bureaus. myFICO is the consumer division of FICO – get your FICO scores from the people who do the FICO scores. For more information, visit https://www.myfico.com.