Hello, I'm your host, Mr. Chuck. Right now you should have received most of your credit card statements. Are you feeling overwhelmed on your Christmas spending? Perhaps you didn't plan for it. And you're wondering how long it's going to take you to get your credit cards back under control. I have some ideas, and tricks and tips to tell you. So perhaps next year, he can avoid being in the same situation. I'll be back in 45 seconds. Welcome together, we're going to explore our personal finances and figure out how to improve them. Whether you're just getting started in life on your finances, or you may already have a home or you're struggling to get credit cards under control, reduced debt increased wealth.com is a weekly podcasts to educate those to improve personal finances, whether it's eliminating debt or making smart investment. Well, you're probably wondering what my tips and trips are, before I get started and Tanya, and helping you get out of debt. Are you the only ones to do this, he shouldn't feel alone. And you can find these articles in my show notes. And the first one is from money watch.com how long it will take Americans to pay off their Christmas debt and this is January of 2018. So it was the Christmas shopping season of 2017 2020 is probably even a little bit worse, I would assume since there's more unemployment on this gun to go over some of the stats here. Shoppers in the US racked up an average of $1,054 of debt does Christmas season, an increase of$5,000 over last year, that would been 2016. According to a survey from magnify money, a personal finance website, it found 44% of shoppers racked up more than$1,000 in holiday debt, and 5% accumulated more than 5000 in debt. That's 49% of shoppers accumulated some debt, at least$1,000 and up to $5,000. And that was in 2017. That could be a much, much bigger number in 2020. If unemployment rates are so high, and those people are still spending money that they don't have. That's got to come from somewhere so it'd be from their credit cards. And only half of those survey are expected to repay the debt within three months, others 29% said they need more than five months to pay it off and often leading to interest on that credit card debt and growing balances. In fact, 10% of the people who took on holiday debt said they would only be able to make the minimum payments on credit cards at the shopper spent $1,054 and paid a minimum payment of $25 each month and he or she will be paying down that balance until 2023 with an average interest rate of 15.9%. fees on that deck that add up to $500. The highest amount of credit card debt in US history is at 1.0 to 1 trillion and outstanding revolving credit card and June of 2017. And I'm sure it's much higher than that. Which gets me back to the point. If you've been listening to his podcast, he should have a debt reduction plan if you're struggling to pay off credit cards and then number one rule would be to quit creating new debt. If you did not apply that rule for the Christmas shopping season and you create it new debt, this is what you're gonna have to do to get things back under control. Step one. How much new debt Did you increase? Our plan here is to get your credit cards back down to the balances that was there before you started shopping for Christmas. Do you even know how much that was? If you do, you're in good shape? If not, you need to go back and look at all your charges. And look at your credit card statements at least back to November 1 maybe into October? How much did you owe on those credit cards, as of say, October 20. If you can look at a detailed statement. And that's your goal, you're trying to get your credit card, Christmas purchases back down so that you can stay on your debt reduction plan. So how are you going to do that, if you're already making the minimum payment, and you're already building up your emergency fund, perhaps you have some extra money and your emergency fund that you can use, you do not want to use 100% of your emergency fund, because there still may be an emergency that you might have to pay for it. So let's say you have an extra$400. Well you want to do is take the money out of your emergency fund that extra $400 and apply it to one of the credit cards that you can get maybe down to the pre Christmas shopping balance, or at least close to it. And what's the next step? Well, the next step, what are you going to be coming up, it's late January, taxes, you're going to be filing your income tax return. And maybe a lot of you have refunds coming, you need to use your refund to pay off your least Christmas card debt, and then use some of it to increase or replenish your emergency fund. And when you do that, you replace that $400 and you want to increase your emergency fund also, then if you have some money leftover, use it for what other plans that you may have. I would first go do an AI vacation because you don't know what does Coronavirus, things doing you may not be able to travel. And there may be a lot of restrictions. So you might as well stay home, say money and concentrate on reducing your debt sounds pretty simple. I know it's hard to do. Another thing you can do, if you have a credit card that you've already paid off is that credit cards sending you statements offers, transfer the balance and pay 3% on the transfer. And maybe they're offering you 12 months or 18 months of no interest on that transfer. If you're getting those offers, you want to take advantage of it. You want to transfer over your highest interest credit card and pay down what you can afford to pay off in a 12 month or 18 month period, maybe just a little bit less than that. So you know you can get a paid off because if you don't pay it off, they go back to day one and calculate interest and you didn't save nothing. So then we want to take advantage of this interest free credit card. And if you can do that, that'll help you get out of your Christmas debt and maybe help you get out of your other credit card debt. A majority of Americans simply did not stick to their budgets according to mobile banking startup borrow money Inc. was 74% saying they underestimated the cost of areas people go over budget include last minute gifts 36% regular holiday gifts 27% food 27% decoration 17% and new holiday outfits 16% So yes, we know we all kind of overdo it get into the holiday spirit spirit. Here bombarded with advertising and it is easy to spend way too much money. Well, many people are hands off checking their balance on a weekly basis with a general idea how much money is coming in and going out as a result, many find himself dipping into savings when they accidentally overspend over the holidays. Hopefully, if you're a regular listener to this podcast, you don't do that. What is the number one thing is getting your budget under control is knowing your numbers, your happy numbers, how much is money coming in? How much money is going out how much money you may have leftover between that particular pay period projecting forward, I've been preaching that look forward a pay period, see what bills are going to be coming due and the next pay period before your next paycheck. That way, you won't run short of money, and you know what's coming up. If you look forward to pay periods, you can get a better overall idea of how much money you're gonna need to spend, how much money is gonna come in, and how much money is gonna go back out before the third paycheck. So farther ahead, you project, your bills and your budget, the better off you're gonna be. Because the more you're gonna know, the more comfortable you're gonna be. When you transfer that money from the checking account to the savings account, then it's gonna stay in the savings account. Remember the federal rules, you can only make six withdraws a month or savings account. And then you're subject to fines and penalties that the bank will impose on you. That's federal rules. I don't know where that money goes. Does the bank keep it? Or does it go to the I don't know. But it's there. And you don't want to pay any more fees than what you have to. Okay in my next article, and investopedia.com financial edge, how to pay off Christmas debt. The first thing they talk about is know how much you owe and the heat of Christmas shopping rush is easy to lose track of how many times you pulled out the plastic. Before the credit card bills come in. Take some time to document how much you spent and where you can tally up your big figures using your purchase receipts. Or you can review your credit card purchases online. Since most credit card companies post purchases in real time. Don't forget to include all the purchases made on payment plans and deferred credit lines or using store credit. Which is not a good thing. Then you got a budget for the first quarter of the year. And I say you should budget for the whole year. But if you've never had a budget before, starting out with the first quarter is a starting point. In order to pay down your Christmas debt aggressively, you need to assess how much extra cash you have every month to pay credit balances down and set up a budget for at least the first three months of the new year, including how much money is coming in from salaries, investments and other income and determine how much you need for non negotiable expenses, such as mortgages, car payments, groceries and utilities. Now when you set up your budget, if you haven't done that before, if you go through and identify things you're no longer using and go ahead and cancel them then that will free up some money. The leftover money is disposable income you should direct as much as possible towards paying down your credit cards. If you're not able to pay off the full amounts in January pay off as much as you can to reduce the interest on the remaining balance. Ignore the minimum balance listed on your statements as paying only that amount might leave you in debt until after next Christmas. Well all that's very true. My debt reduction plan calls for paying the minimum balance putting the excess money into a emergency fund. And then once you have a couple thousand dollars, make a lump sum payment on your highest rate card that you have. We talked about that in the past, and nothing has changed. For those of you that has never done a budget or never listened to my podcast, and that doesn't seem like how am I gonna get out of debt faster, but it works because you want to make $1,000 lump sum payment on that credit card is gonna drop in a hurry, and your interest is gonna drop a lot. And also the emergency fund is there if something else would come up, and it helps you to stop creating new debt. Okay, the next thing in the article talks about is earmark your income tax return. Now this is assuming you're getting a refund, they're saying use your refund, once you get it, they say file as soon as possible. Get your refund as soon as possible, then apply the refund to your credit card debt. And all that's very good. I agree with all of it. But I would say put some of it in an emergency fund if you're still struggling to build up an emergency fund and put part of it and to emergency fund and let's say 20%. So you least have emergency fund, and then use the remaining to pay down the credit card debt, then you need to set up a monthly savings plan for next year. Again, pay your minimum on your credit cards, put it in your emergency fund. Now what I recommend is increase your emergency fund by the amount of money that you charge for your Christmas purchases. So if you already had emergency fund, let's say for example, 1500 dollars, and you charge $1,000 and Christmas card debt, you need to put in about$100 a month, that'll give you an extra 1200 give you a little extra, if you don't use it, you have a larger emergency fund, when I'm saying $100 extra, that means you're gonna leave it there. So you're gonna pay the lump sum amount a little bit less, you're going to short it by $100 every time you do it. Or if you do it once every three months, you're going to short it by $300 $100 per month. That'll do two things, it will help you increase your emergency fund and it will give you extra money so that you can stop creating new debt next Christmas season. And the bottom line is I tried to spend less during Christmas. And I have some other ideas and how you can do that. And you need to pay down your credit cards as quickly as possible. Yes, I agree with that. But just by increasing your monthly payment by $50 a month$50 more than a minimum is not going to help you a whole lot. And once it goes to that credit card, you don't have it and you don't have it in an emergency fund. So you're not helping yourself and the number one rule, quit creating new debt. I know I said that multiple times. But that's important on how you get out of this struggling credit card debt, and all debt eventually. If you can do that, you're going to give yourself a big Christmas gift next year, and your gifts gonna be having all your credit cards paid off. After the Christmas shopping is over. And January of 2022 you're gonna have all your credit cards paid off and you're gonna be increase in your emergency fund and you're gonna work on paying down other loans. So that will free up more money in future years. I also look for any other articles on how to pay off Christmas debt. And all of that I came across two or three more they're saying the same thing. Some saying a little bit different. I'm pretty much unique on town, everybody, just pay the minimum balance, build up your savings account your emergency fund. Once you get a large amount of money, build up in your savings account, leave some in the savings account and then use that money to apply to your highest rate credit card, then the next highest rate, credit card, and so forth and so on. I'm the only one saying that it works great. I don't know why everybody else is overlooking it. Because I went for years, or I paid $200 a month extra on a credit card, $300 a month, whatever I had, and then I always was broke, I didn't have any money. And then something would happen. And I had to charge again. So I didn't stop creating new debt. Therefore I never got out of debt. I tried. Occasionally I'd get a credit card paid off. But a few months later, I was back in the same boat. Not that I was out there just wasting money is this things came up. And I need it, you know the money, I didn't have it in a savings account. So I had to use credit. I hope you can see that and understand what I'm talking about. But the other articles I came across their idea of helping you pay off credit card debt earlier is doing getting a part time job working over time, creating some type of business. And that takes weeks, months and years to build up. I assuming that you're working as much as you can, you're making as much money if you're unemployed, you're looking for a job, and you're willing to take any job out there. To earn money, try to reverse the trend of where you are and to improve your life. As far as looking for something to do to make extra income. My rule of thumb on that is generally speaking, the population the people are fairly lazy. When I made my that is there's things that they need to do either daily or weekly. That they don't like to do, they keep putting it off. If you can figure that out what people need to have done. And then do it form and charge your money based on 20 bucks an hour or at you do it enough, you'll know about how long it takes. So you can say I'm going to charge a minimum of three hours and $60 it takes you 20 minutes, you're making some money. Don't forget, you need to report that on your income taxes. And it's subject to self employment taxes. If you live in United States, I just want to point that out. But things like shoveling snow on the driveway, if you're in the northern area, or cleaning leaves out of gutters in the fall or taken down or Christmas lights or even putting up Christmas lights in October, November. and setting it up form you probably can make a business out of that. If you just contact your neighbors do a little flyer, put stick it in the door, go around talk to people, you only need to do five or 10 of them. And you're going to have some extra money. So next October, November, you can make a few extra bucks to help you from creating more debt when you go and do your Christmas shopping because you'll have the cash to pay for it. It's just an idea thing that people put off doing that I know in my area. They've been made business out of it is picking up their dog poop. And the problem with that is you got to dispose of it unless you can leave it on their property or throw it in our trash. I wouldn't do it. So if you're going to go pick up your dog poop takes you five minutes a day. I haven't pay you once a week. Figure out how long it's gonna take you 15 bucks a week. Maybe you can have your kids do it and they can make some pocket money. So you can save some money by not giving them an allowance. I don't know it's up to you. Those are just some things. I'll be back and 35 seconds was my final thoughts. You can share this episodes with your friends, I'm open for any suggestions for improvement, or for information that you would like to hear about in the future, you can go to my Facebook page and leave me a message, more than glad to respond. To find my Facebook page, go to reduce debt, increase wealth.com and click on the Facebook icon. So my final thoughts, in order to take care of your Christmas debt, you need to have a plan, the best plan you could have is a debt reduction plan. First thing you need to do is quit creating new debt. And then make the minimum payments on all your credit card. Save all your excess money into your savings account, which I also refer to as your emergency fund. Once you have that build up to a significant amount where you have enough for an emergency, use the excess money to make a lump sum payment on your highest interest rate credit card. In order to avoid the same problem next year, you need to increase your emergency fund by the amount of the Christmas spending that you did and the past year. That way, when you go to pay your Christmas bills, you'll have the money in your emergency fund to pay off your credit cards down to the balance they were before you started your Christmas shopping. I hope everybody gets and understands this episode because you can really make your life much better by using common sense and having a debt reduction plan in place year round. Also good luck and trying to figure out a business you can do to make extra money to help you pay off that debt.