By now, evidence of the holidays is down to a pile of evergreens at Santa Rita Park, a random sparkle of glitter and the occasional piece of tape stuck to your floor. Settling back into life’s routines, you grab a cup of coffee and prepare to pay this month’s bills.
With wide eyes, you’re quickly reminded of all the $6 pumpkin spice lattes, the cost of feeding a crowd and how much joy you had on Noel Night.
If January had a theme, it would be appropriate to designate it as the cutback month. Both credit cards and waistlines are ready for a holiday hiatus.
Alas, choices have been made. We cannot return that third serving of apple pie any more than we can send back a gift we gifted. What we can do is assess the damage and course correct.
If you tipped the scale and now find yourself in the red, it’s time to make a recovery plan. Do not panic, you can tackle this one manageable bite at a time.
That’s a poor analogy, one bite at a time may be what tipped the scale. How about, “don’t panic, you can tackle this one step at a time?” Better.
Step one, figure out how much money you owe on each credit card and other loans, such as a mortgage or vehicle. You’re paying interest on these. Higher interest rates cost you more, adding to your debt.
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There are a couple of strategies for paying off debt. Prioritize paying off high-interest loans first, or prioritize paying off smaller debts first. Paying more than the minimum on smaller loans will reduce one debt rather quickly. This can feel rewarding, thus encouraging good money management practices.
Where does the money come from to pay off your debt? That’s step two. Unless you can increase your income on an as-needed basis, for example, by working extra shifts/hours or selling something you own or make, you’ll have to make some financial decisions.
The toughest question you’ll have to reflect on is, what do you need to spend money on and what do you want to spend money on? Remember, wants and needs are easily confused. Oddly, it’s not all that different from making food choices. Do we need or want apple pie?
You’d be surprised at how much you can save by simply cutting back on “wants.” Purchasing one latte a week instead of three gives you $12 to put toward debt. Just like using an ounce of creamy salad dressing instead of two can save 100 calories. You don’t have to suffer through caffeine withdrawal and a dry salad to pay off your bills.
Debt, like weight loss, can feel overwhelming. Small steps are the key to your success. Saving $12 or 100 calories doesn’t seem like a lot, maybe not even enough to make it worth your while. It’s the accumulation of many small steps over time that result in the change you want to see.
Consider consolidating debt. Transfer all or some of your credit card debts to one, ideally one with the lowest interest rate. Every time you save $12, make a debt payment. This can be a good strategy for those who tend to spend before they can save.
Finally, avoid situations that will encourage you to add to your debt, such as browsing online (or in the bakery). With the click of a button, you can easily add hundreds of dollars (or calories) to your debt.
Nicole Clark is the family and consumer science agent for the La Plata County Extension Office. Reach her at nicole.clark@colostate.edu or 382-6461.
