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Consumers Advised to Avoid Debt Hangover after Holiday Season

By Sally Maison
Published: Wednesday, January 6th, 2010

After spending a lot on gifts, food, and tons of holiday merriment, consumers have reached the sobering month of January when they will have to figure out how to pay those credit card debts they have racked up. With merry spending bills soon to knock on their doors, consumers will have to map out their 2010 financial route now or end up ruining their credit score.

Consumers Advised to Avoid Debt Hangover after Holiday SeasonBecause those holiday bills just seem so heavy after a joyful holiday, many consumers would just like to put them back to their mail boxes and just forget about them. However, Gail Cunningham says that is not the way to deal with debts. The spokeswoman for the National Foundation for Credit Counseling advises that things will get more difficult as those bills continue to arrive. Not planning how to deal with debts as soon as possible could cause consumers to hurt their credit score. Eventually, a low credit rating would make it difficult for them to qualify for a loan or even land a job.

Instead of pretending that those bills do not exist, finance advisers say it is best to open them and follow their tips on how to deal with debts. First, Ms. Cunningham suggests setting an end date or establishing a goal when one would be able to pay off all those holiday bills. The end of the first quarter, Mar. 21, is the date she has in mind.

Experts comment that their credit score will remain intact as long as consumers are able to meet their monthly payments, but they will not able to pay off all their debts quickly if they do not pay more than the minimum monthly balance. Ms. Cunningham cautions that stretching payments could only make them lose the savings they gained from holiday sales and discounts.

Financial planner, Lyn Mayabb, suggests one way to keep cardholders from acquiring more debts—paying out of their wallet when tempted by post-holiday sales. Ms. Cunningham added that people who purchase using cash save about 20 percent more than those who make purchases through their cards.

Of course, finance advisers did not forget about the classic and most effective way of improving a credit score: budgeting.  Ms. Cunningham advises consumers to keep track of how much money they are getting, where they are all going, and how much they will allot to debt payment. She suggests tracking every cent spent for the next 30 days, even those spent for little items such as gums and soda.

Finally, experts advise consumers to look for extra income sources so they can pay off their debts quick and improve their credit score in no time.

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