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“You’re never going to get out of debt if you’re ,” says Scott Thoma, principal and retirement strategist at . “As best as you possibly can, focus on reducing that high-interest, non-deductible credit card debt.” Mary Ellen Hancock, certified financial planner and senior wealth strategist at PNC Wealth Management, recommends taking time now to evaluate each of your credit card statements and set achievable payment goals for the year. “Whichever credit cards have the highest interest rate, those you want to get rid of first,” she says. “Whatever the payment that you may have made towards that, then deploy that into the next credit card and start to whittle it down.” You can also look for a for your debt. A low fee and generous introductory period can help you consolidate your credit card debt and reduce interest. To reap the most rewards from these cards, have a solid plan in place to pay down your debt before the zero percent APR introductory period ends. 2 Tighten your budget
“The new year is always a great time to sit down and re-evaluate things,” Hancock says. “Put your goals in place as to what you want to do.” Jennipher Lommen, founder of Wildflower Financial in Santa Cruz, California, says to review last year’s monthly purchases from before the holidays to determine your real spending, divided into discretionary and non-discretionary categories. Once you know those totals, you can begin setting goals for your new budget based on real numbers. “It takes understanding how much of your monthly check you can save for those future things, and to know how much of your monthly check you need to spend on the necessities of your life,” she says. “There’s really no way around it. There aren’t any tricks.” Ask yourself how each new purchase will affect your debt and the goals you’re trying to achieve. “Start thinking about every single purchase you make,” Thoma says. “There should be some sort of evaluation.” 3 Try quick fixes
If you fell for steep seasonal discounts on items you weren’t planning to buy, reconsider your impulse purchases from the past month that are still protected by a return policy. “Everybody gets caught up in the moment,” Hancock says. “Whether it be something that we use once a year or it was just kind of funny this year or if you buy extra stuff because you just got caught in the moment, sit back and re-evaluate.” It may not be the most exciting use of your holiday gifts, but you can also make a dent in holiday debt by building certain gifts you received into your new budget where they’re applicable. Gift cards and food gifts can help you save on discretionary spending, and cash gifts are a great way to instantly pay down some debt. Another option: “Taking on extra income is a great way to supercharge both debt paydown and additional savings,” Lommen says. Consider a to cushion your budget. 4 Start planning ahead
Don’t let yourself fall into the same traps next year. Once you’ve paid off your holiday debt, or as soon as you have the resources, start saving a portion of your monthly income in an account reserved for the holidays. Calculate what you expect to spend next year using this year’s total and you can offset a good portion of your holiday spending. “At least by the holiday season either you have everything paid for that you need to pay or you have at least 50 to 75 percent of it paid,” Hancock says. “That also might prevent you from those impulse purchases. Or maybe you plan for that. I know I always want to get a little fun something for myself or for the house, so I’m going to budget for that.” Thoma agrees that setting aside money throughout the year can keep you on track. “You are consciously and purposefully saving for that amount so you know when the holidays come, you pull that little jar off the shelf and that is something you have for the holidays,” he says. “Now, you’re not spending money on gifts that should have been going towards reducing your debt.” 5 Keep your eye on the big picture
Start rebuilding your healthy habits now so you don’t get dragged down further throughout the year. “You don’t want the pain to linger for an entire year; that is one year less that you can save for other goals,” Lommen says. Don’t forget to also consider your investments and savings goals for the new year and look ahead to where your money will stretch the furthest. Markets are volatile, and . Lommen says that paying off your holiday debt as quickly as possible can help you take advantage of current buying opportunities for interest-earning investments. “If the market is going to continue to fluctuate the way it has been, the upside is that you could be buying low.” You want to keep saving, she says, “and if you are stuck in a cycle of debt where you can’t contribute, you might be missing out on that buying opportunity.” And don’t forget about the resources you already have. “As you’re going into 2019,” Thoma says, “not only do you want to focus on your spending and start instilling good habits around that side of the ledger, but also review investments to make sure they’re still doing the job that you want them to do.” Learn more
Top 7 financial New Year’s resolutions SHARE: Kendall Little is a personal finance writer who previously covered credit card news and advice at Bankrate. Kendall currently is a . She is originally from metro Atlanta and holds bachelor’s degrees from the University of Georgia in both journalism and film studies. Before joining Bankrate in August 2018, Kendall worked in digital communications throughout various industries, including education, health care and television. Related Articles