CCOA offers tips to conquer post-holiday bills
Ideally, the holiday season produces smiles and good cheer.But a few weeks after the year-end celebrations, smiles can turn to frowns with the arrival of credit card bills. Cold reality is typical of winter, especially if a consumer’s holiday spending went a little overboard.
Credit Counseling of Arkansas (CCOA) is a local nonprofit organization that provides free financial literacy counseling, education and services. For people who find themselves confronted with post-holiday debt, the agency recommends:
* Don’t fret! This is easier said than done, of course, but stress and self-doubt don’t enhance the situation. Take a deep breath, then vow to make a financial resolution you’ll keep.
* Assess the situation. If you don’t have a budget, this is a good time to develop one. This is usually a two-part process:
— First, make a list of all regular monthly family income sources.
— Then – and this is harder – list all financial obligations: savings, rent, car payments, utilities and phone/Internet, food, etc. Make sure to count everything, even small purchases such as vending machine buys.
* Analyze the results. A separate tally of the previous two lists will yield a total income and debt obligation, and the difference in those two will represent either a monthly surplus or deficit.
* If the number is a surplus, that’s a good start. Without neglecting your emergency fund, put as much of the surplus as possible toward paying down the debt. For those with interest-carrying debt, consider paying more on the debt with the highest interest rate. Most lenders ask for a minimum payment of 2 percent of the balance. Try to pay much more than the minimum – at least 5 percent is recommended.
* If the difference is a deficit, bolder action is required. Shift into an emergency spending mode and cut all optional spending immediately. Some reliable money-saving tactics when going into “belt-tightening” mode include:
— Sharply reducing restaurant expenses for an indefinite period. For a family of four, this can save $15-$20 per visit to a fast-food stop, or $25-$50 and more for a “sit-down” meal. The savings could be several hundred dollars in a short period of time.
— Cutting back on entertainment expenses. This could mean no sporting events or movies for a while, reducing cable TV channel subscriptions or even scrapping cable entirely. Public libraries have free memberships to residents and besides great books often have a wide selection of movies and music to borrow.
* Get help. For more money-saving tips, visit the CCOA Web site at www.CCOAcares.com. Or call CCOA at 479-521-8877 to schedule a free, one-hour financial review and budgeting session.
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.