Holiday Debt. Get Rid Of It.

Plan To Avoid It Next Year.

Holiday bills, representing holiday debt, will soon be filling many people's mailbox replacing the greeting cards of just a few weeks earlier. Then what? Better money management will be the key to regaining control of finances for those who ran up holiday debt.

Holiday spending is not planned for by many people, even though it is an expected major annual expense. As a result, this spending often end up on credit cards that can take well into the New Year (and beyond) to pay off.

If you overspent at the holidays, try these tips to reduce debt.

•   Stop using your credit and charge cards. Use cash when possible to pay for food, clothes, utilities, rent/mortgage and other necessities. Keep your credit card charges to a minimum (if not zero) until you pay off your holiday debt.

•   Add up your holiday charges. On a sheet of paper or with the use of a computer spreadsheet program, create columns for each credit card, the amount outstanding and the annual percentage rate. This will tell you how much money you owe. This is important before you can structure a repayment plan.

•   Develop a repayment plan. Decide how much money you can devote each month to pay down your holiday debt. Look for ways to shave expenses to set aside an extra $50, $75 or $100 a month to reduce your holiday debt. You might consider reducing long-distance calls, eliminating  magazine and other subscriptions and eating out less often. You could also have a garage sale or get a part-time job.

•   Stick to your plan. Put it into play and stay with it. Pay off the credit cards with the highest interest rates first. You might also investigate the possibility of transferring bills to credit cards with lower interest rates.

•   Create a plan for the 2007 holiday season. One of the major causes of holiday debt is a lack of planning. Open a holiday account to save for the holidays in 2008. Use your 2007 expenses as a starting point for what you will need in 2008. Take the time to prioritize what it most important to you and look for areas to shave costs, such as entertaining less or giving home-made gifts.

During the holidays, it's easy to get caught up in the spirit of the season and spend beyond your means. If this happened to you, treat this as a learning experience and resolve to do better this year.