If you're still paying off Christmas debts, it's time to take a hard look at how you're using your credit cards.
You won't be alone. Consumer counseling agencies see a 25 percent increase in the number of people seeking help in January and February, and most of that traffic is propelled to their doors by holiday bills that haunt consumers like the ghost of Christmas past.
"A lot of people get by, paying the minimums on their credit cards," said Durant Abernethy, president of the National Foundation for Credit Counseling. "Add on the holiday bills and all of a sudden, those minimums are more than they can afford."
You obviously can't go back and undo your Christmas spending. But you can learn from it.
"People in trouble generally don't have a good idea of how much they spend," said Abernethy, whose group is the umbrella for the nonprofit Consumer Credit Counseling Service agencies around the country.
He emphasizes the importance of budgeting and planning ahead, saying: "If you need to use a credit card to reach a goal, you should be able to pay it off in no more than 90 days — and, preferably, in 30 to 60 days."
Robert Manning, a senior research fellow at the University of Houston and author of "Credit Card Nation — The Consequences of America's Addiction to Credit," believes part of the problem is that the nation's ethic has changed.
"Our parents viewed debt as a shame and accumulating a nest egg as the right thing to do," Manning said. "The young see that as 'old school' and have been convinced that going into debt is fine."
Industry of Debt
The result, he said, is that while 40 percent of credit card users pay their bills in full each month, the remaining 60 percent roll them over — and over and over. He calculates the average balance of these "revolvers" at more than $11,500.
"The debt industry — and it is an industry — has persuaded people that their 'wants' are 'needs' and that if you really care for someone, you'll spend more money on them," Manning said. "They tell you it's so easy, just use plastic. But they don't tell you how it will hurt, in mounting debt and higher interest rates and higher fees."
You can figure out just how much your Christmas debt is costing you to carry by using calculators on the Internet. Plug in $1,000 at 17 percent (the prevailing credit card rate) in the calculator at www.bankrate.com, and you'll find that your interest totals $94 over one year and $187 over two.
Nancy Dunnan, author of "How to Invest $50 to $5,000," recommends that the way to begin getting a handle on credit card debt is to make a list of all your unpaid balances along with the corresponding interest rate, "then start paying down the card with the highest rate first."
If your problem is mainly holiday bills, "it shouldn't be difficult to figure out some ways to gather up a little extra cash" by eating out less, taking a lunch to work, doing without cappuccino for a while, even getting a weekend job, she said.
"And use this as a heads-up for next season," Dunnan said. "Figure out what you spent last year and try to put aside some money each month so you'll accumulate that amount by next Christmas."
She adds: "If it's more than you can afford to set aside, then maybe you need to cut back on Christmas spending next year. Certainly friends and relatives don't want you to go into debt for the holidays."