Often, Meyer said, people plan their recurring monthly expenses well, but stumble when they set aside money for known but “irregular” expenses, such as vacation expenses and vacations. She suggested adding up all of these expected costs and setting aside a fixed amount for them each pay period to reduce the need to carry a balance on credit cards.
“Think of these things as part of your monthly budget,” she said.
Online budgeting tools can help. Wirecutter, an affiliate of The New York Times, recommend You need a budget.
And rethink your holiday budget if it has become a burden. Relentless marketing pushes people to meet expectations they cannot afford, Mr O’Brien said, leaving them stressed and in debt.
“It’s a ridiculously expensive season,” he said. “And it wasn’t always like that.” Planning more reasonable gifts, he said, can help you succeed next December.
Should I always pay off the card with the highest interest rate first?
Some people may prefer to pay the most expensive balance first, while making minimum payments on other cards. Then, when the first card is paid off, additional payments are transferred to the card with the next highest interest rate, and so on, until all balances are paid off. This approach can save the most in interest charges.
Others, however, may prefer to pay off the card with the lowest balance first, regardless of the interest rate. The idea is that seeing a balance paid off gives a sense of accomplishment and encourages you to keep paying down your debt.
“It really depends on what motivates you,” said Madison Block, spokeswoman for American Consumer Credit Counseling, which advises people on debt reduction.
What if I’m having trouble making minimum card payments?
If you can’t see a realistic way to pay off your debt, you may want to seek advice from a nonprofit credit counseling company. Companies usually offer free budget advice and can also help negotiate – for a fee – debt management plans with credit card companies, which will allow you to pay off your debt at a lower interest rate on several years. To find a reputable company, start by checking the List of Department of Justice companies authorized to provide compulsory bankruptcy advice.