Hey Big Spenders, Holiday Bills Will Fill the Mailbox Very Soon

The combination of rising credit card minimum payments and reduced credit limits coupled with record levels of unemployment are challenges for many Americans as we enter 2011 and even with all this, holiday spending was up 3.3% over last year.

Christmas 2010 could go down as the holiday season that Americans spent, spent, spent, despite the recession. According to retailers people spent more than expected on family and friends and indulged themselves, too, an element missing for the past two years. The changes credit card issuers made in response to the Credit CARD Act of 2009 has forced people to look at their credit situation more carefully yet spending for the holidays has greatly exceeded expectations – why?

Often during times of economic hardship people splurge to remind themselves that things are not as bad as they seem. American’s tend to be optimists and hard working which in no small way has contributed to the greatness of our beautiful country. Many people truly don’t realize how much money they’re spending until the credit card bills come in January. If you’re unorganized with holiday shopping, you may not know how much to budget for each person, pay extra for last-minute shipping or spend more than you realize in other ways. Many people are unaware of their overall financial situation. They have no clue how much money to allot for holiday gifts, so they just buy what seems right at the time and pay for it later.

The National Retail Federation predicts spending this holiday season will reach $451.5 billion, up 3.3 percent over last year. That would be the biggest increase since 2006, and the largest total since a record $452.8 billion in 2007. The holiday season runs from Nov. 1 through Dec. 31, so there are still a few days left in the holiday shopping season. If you know you went overboard with spending this year I have a few action items for you:

Stop using your credit and charge cards. Use cash to pay for food, clothes, utilities, rent/mortgage and other necessities. Vow to not use your credit cards until you pay off your holiday debt.

Add up your holiday charges. On a sheet of paper or use our credit card tracker to see how much money you owe.

Develop a repayment plan. Decide how much money you can devote each month to pay down your holiday debt. Look for ways to shave expenses to set aside an extra $50, $75 or $100 a month to reduce your holiday debt. You might consider reducing long-distance calls, eliminating subscriptions and eating out less often. You could also have a garage sale or get a part-time job.

Stick to your plan. Pay off the credit cards with the highest interest rates first. You might also investigate the possibility of transferring bills to credit cards with lower interest rates.

Create a plan for the 2011 holiday season. One of the major causes of holiday debt is a lack of planning. Consider opening a holiday account to save for the holidays in 2011. Use your 2010 expenses as a starting point for what you will need next year. Take the time to prioritize what it most important to you and look for areas to shave costs, such as entertaining less or giving more home-made gifts.

During the holidays, it’s easy to get caught up in the spirit of the season and spend beyond your means. If this happened to you, treat this as a learning experience and resolve to do better this year. If you need help, visit ConsolidatedCredit.org to see if they can help you with a plan to pay off your debt!