Decreasing Holiday Debt - Newschannel 6 Now | Wichita Falls, TX

Decreasing Holiday Debt

Many Texomans are walking out to a mailbox full of bills from the holidays and wondering why they spent so much on Christmas and New Year's. Many of them are now in debt from over spending during the holiday season.

"The folks who are in the very worst scenario are the ones still paying off holiday spendings from 2012. Now, they have massed a debt they can't service and is very serious," said Gail Cunningham with the National Foundation for  Credit Counseling.

Being in debt can be very stressful and have some serious consequences. It can drop someone's credit score substantially. Paying bills on time makes up 35% of a credit score. 

"If you need additional credit or a credit line raised on an existing line, you may be denied access simply because of the amount of debt you owe," said Cunningham.

Luckily, debt can be erased. However most people won't admit they have a problem.

"The first step is to recognize the problem. A lot of people want to bury their head in the financial sand. They know that they owe the debt, but it is so over whelming they ignore it," said Cunningham.

Once people have accepted the fact they are in debt, there is only two ways to get out: find a second job or cut expenses. Cunningham said people should try and find a second job they will really enjoy.

If getting a second job is not an option, then cutting expenses is the only one. Cunningham says before people can do that, they need to know where their money is going.

"It can start by simply putting your statements of how much you make and how much you owe on the kitchen table. So take a look at your finances and commit for 30 days to writing down every cent you spend. Categorize it into living expenses such as rent, mortgage, utilities, child care, medicine, gas, car payments etc," said Cunningham.

From analyzing expenses, people can find hidden money to pay bills with.

Cunningham has even more advice for people who are able to pay their holiday debt off by the end of March.

"Look at all the numbers from what you spent not just on gifts but on travel, entertaining, gift wrapping decorating  etc. You have those numbers in front of you, then divide that number by seven," said Cunningham.

The number seven should be used because there is seven months left before the next holiday season starts. If people put that amount of money away each month, then next year's holiday season will leave them debt free.

James Parish, Newschannel 6

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