CHARLOTTE — If you’re worried about the debt you took on this last Christmas, know you’re not alone. If misery loves company, you got plenty of it.
But Consumer advisor Clark Howard wants you to know there are ways that you can pay that debt off one step at a time.
Howard spoke with Ama Yates Ekong and Deon Butler who faced a mountain of debt from the 2023 holiday season.
“Getting gifts, travel for the holidays,” Ekong told Howard.
“You want to make sure you get gifts for the kids and gifts for the family,” Butler said.
“So, things just started to build up over time. It became really overwhelming,” Ekong said.
That, along with recently buying homes, left them facing big-time debt. Some of that debt has lived on high-interest rate credit cards.
“My limits were pretty high. So, you just swipe and swipe,” Ekong said.
When she started a new job that came with more money, Ekong said she started spending more.
“Then I start to get a little a little lax and just swipe too much. And it was like 2,000 turned to 6,000, 6,000 to 7,000,” Ekong said.
Paying only the minimum due each month on credit cards will leave you feeling like you’re not making a dent in your balance.
“You make a payment and it’s like only $80. It seems like it’s going towards it,” Ekong told Howard.
Butler said he didn’t want to pull from his investment accounts to pay off the debt, so he was trying to figure out what would make the most sense for him.
That’s when he reached out to Money Management International (MMI) for help.
“We saw the prices go way up on everything. And everybody’s been sort of waiting for them to come back down and it’s not happening. And so, what we’re seeing is rising debt,” Tara Aldrete, MMI’s Director of Enterprise Learning, said.
MMI is a non-profit credit counseling and housing organization.
Alderete said even if consumers have a plan for gifts during the holidays, there are other costs you might forget to calculate into your budget.
“They don’t necessarily think about the cost of wrapping paper and decorations and travel and cookies for neighbors,” Alderete said.
By the time December hits, consumers think “my gosh, I better just swipe this credit card,” Alderete added.
And when you look at the numbers, 36 percent of people took on extra debt for Christmas. Over half of them didn’t think they would, according to a Lending Tree survey.
Matt Schulz, the Chief Credit Analyst at Lending Tree, said on average – that adds up to almost $1,200 of extra debt.
“So, it’s an awful lot of money considering how tight most people’s budgets are,” Schulz said.
Howard said that if he’s making you uncomfortable right now about the debt you have from Christmas, he wants you to take all your credit card statements and see what you owe on each one – write it down.
Put the interest rate next to each card, and the amount, and then start paying the minimum on the cards with the lower interest rate.
And send as much money as you possibly can each month to the one with the highest interest rate, and stick to it to pay that debt off.
“I see the debt going down, I see the progress being made. And I’m really excited to actually be 100% credit card debt free,” Ekong said.
It’s so easy to feel overwhelmed when you have those bills coming in, but Howard says there are people out there who do want to help you.
Howard also suggests leaning a friend who’s really supportive – maybe somebody who’s also on a track to pay off debt.
Howard advises consumers to buddy system with each other, guide each other, and encourage each other to get the debt paid off. You can do it.
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