by Todd Pheifer

Created on: December 30, 2008   Last Updated: January 04, 2009

During the holiday season, the costs can tend to rapidly accumulate. Between gifts, food, and parties, people can rack up some serious consumer debt, particular on credit cards. Unfortunately, people don't always make the best decisions during this festive season. People get caught up in the spirit of the moment and add to their balances, assuming that they can take care of things after the New Year. Here are a few thoughts on how to manage that post-holiday debt before it gets too far out of control.

Budget time

One way to deal with the credit card bills is to set up a budget for the new calendar year. Granted, budgeting is something that is often easier said than done, but it is a crucial part of the debt reduction process. Budgeting includes doing an honest assessment of income and all expenses that occur on a monthly basis. Of course, a budget not very useful if isn't followed.

A plan for reduction

Budgeting is just the first step of the process. Consumers must also have a plan as to how they are going to reduce their debt. This includes putting together a schedule of payments that allow for the debt to be reduced in a progressive but realistic manner. In other words, people have to give themselves a chance to reduce their debt but they can't be so ambitious that they get discouraged.

Spending cuts

Or course, debt reduction doesn't do any good if spending doesn't change. This is why budgeting is so important. If the debt total doesn't get reduced or continues to climb because of out-of-control spending, then any planning is just academic. People must be willing to make some sacrifices in order to reduce the expense portion of their budget.

Giving up a few things

Some of these expense choices can be difficult but sometimes they are necessarily. Therefore, people have to willing to give up certain luxury items, even if it is just for a period of time. For example, cable television, cell phone extras, eating out, entertainment items, clothes, and vacations are all things that may be able to be put on hold.

Get out the scissors

Some people may need to take drastic action. This may include getting out a pair of scissors and cutting up credit cards and throwing away the pieces. Granted, people may need to keep a credit card for emergency situations, but other cards may need to be destroyed in order to be serious about debt management.

Consolidation

While loans are not always advised, people may consider taking out a personal loan or refinancing their home loan in order to manage their debt. This action is justified when interest percentages are very high, as with certain credit cards. Again, this should only be done if people have some sense that they will not immediately refill their credit card balances. Otherwise, they will be faced with a similar situation in the very near future.

Making tough decisions

Debt reduction doesn't have to be complicated, but people do have to be diligent. Sometimes the hardest thing in life is to employ discipline to basic life situations. If people are serious about reducing their post-holiday debt, they will have to make some tough choices. Otherwise, they may soon find themselves in a much deeper financial hole.

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