Recover from holiday spending

How did you do with your holiday spending? Did you save up ahead of time and pay all cash? If you used a credit card, did you hold spending to an amount you can pay off in three months?

No?

If you cringed as the spending tab got higher, or are cringing now, take heart. You’re not alone.

Here is your Holiday Debt 2007 battle plan:

“When the bills come in, open them immediately. You need to know right away what you’re facing. Add them all up. Can you reasonably pay off the debt in three months? How about four? Maybe five? Your goal is to plan your payments and stick to it. The interest will keep adding up as long as there is a balance.

“Chances are the first post-holiday credit-card statements will offer you a “free” month of no payment due. It’s a trick. Don’t fall for it. The meter is still running on the interest, and the principle will still be there with the balance rising. Make a payment anyway, hopefully a large one from your plan.

“If the holiday spending damage is spread out over multiple credit cards, and if you can’t reasonably pay it all off in a few months, attack the one with the highest interest payments. Make hefty payments to all the cards, but push extra money toward the one that’s costing you the most in interest.

“If you’re strapped after the holidays and can’t begin to formulate a plan to pay the cards off in a few months, don’t be tempted to make only the minimum payments. Those get noted on your credit scores, and they hurt you when your interest rate rises. Pay at least the minimum, and something more. Even $10 added to a minimum payment will keep you out of the dreaded minimum-payment category.

“Lock up the credit cards and don’t use them until the holiday debt is gone.