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How to Quickly Get Rid of Holiday Debt

By U.S. News & World Report

It’s a familiar cycle for many Americans. You dream of having this wonderful holiday season with your family and friends. You have visions of your loved ones opening the perfect gift and having a warm smile on their face. You think about the perfect meal with everyone gathered around a table together, no matter how far they’re spread around the world the rest of the year.

And, to make that vision come true, you pull out the credit cards.

Maybe you pull off most of that vision of the perfect Christmas. Maybe it doesn’t quite work out. Either way, after the holidays are over and the presents are opened and your uncle has overstayed his welcome, you’re left with a bunch of credit card debt.

What’s next? How do you handle this little (or big) bubble of debt before the interest begins to have a real negative impact? And how do you prevent this from happening next year? Here’s a guide to handle both situations.

Start by making January and February lean months for spending. You’ve just enjoyed a plentiful holiday season, so reconcile that with a couple months of cutting back. That doesn’t mean you start eating nothing but lentil soup, but it does mean you can sacrifice some of the splurges you typically enjoy during those months.

Channel that savings directly into big credit card payments. Take a look at your credit card bills, and figure out which one has the highest interest rate. Then channel your extra payment toward that card. Make the biggest payment you can possibly afford while still paying your other bills and making minimum payments on your other credit cards. This route will help you pay off your cards the fastest.

Look for zero-interest balance transfer offers. Before you send in that big extra payment, though, spend some time looking through credit card offers for balance transfers that allow you to pay 0 percent interest on that transferred debt for a certain period of time. If you can transfer everything to a 0 percent interest offer, that’s great. If not, you should still make extra payments on your highest interest debt. Just make sure you get the transferred balance paid off before the zero interest offer ends.

Sell unwanted items. You’ll find that after the holidays, you may have some unwanted items around your home, including gifts you receive and old items that new gifts may replace. There’s also the spring cleaning period that people start at the first glimmers of warmth. All these things result in items you can sell to earn a bit of extra money using services like Craigslist and eBay, and then you can channel that money into even bigger extra payments on your highest interest credit card.

Start a savings plan for next year’s holiday season. The best time to start a savings plan for next holiday season is right after the this holiday season. If you get started right away, you can easily save a small amount each week and have a large pot of money next December. For example, if you start on the first Monday of December and save $10 a week for 50 weeks, you’ll have over $500 in the bank in the middle of next December. If you save $20 a week, you’ll have over $1,000 for holiday expenses just waiting for you. The easiest way to do this is to set up an automatic weekly transfer, something that most banks will help you set up.

Make the holidays more realistic. In the aftermath of the holidays, it makes sense to discuss some sensible downsizing with family and friends for next year. You can discuss putting cost restrictions on gifts, moving to a drawing of names for a gift exchange or dropping presents altogether. You might also want to discuss arrangements that reduce the challenges of travel on everyone, as with my wife’s extended family which recently moved their holiday celebration to a more central location that’s more convenient for everyone.

The spirit of the holiday season and the togetherness and warmth that it brings isn’t something that should cause you to go into debt. As you celebrate the season, keep in mind the things that actually matter and are meaningful for you and those closest to you. You might just find that those things don’t come wrapped in a package and don’t involve stressing out about the perfect holiday dinner.

More from U.S. News

9 Ways to Save When Holiday Shopping With Credit Cards

15 Ways to Avoid Holiday Debt

50 Ways to Improve Your Finances in 2016

How to Quickly Get Rid of Holiday Debt originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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