The BBC reported that this year’s Black Friday shopping activity broke previous records. In its third year in the UK, Black Friday sales are expected to top the record set in 2015 of £1.9 billion. And, with totals that high, it is easy to assume many shoppers took on debt to make purchases.
If you were one of the masses that indulged (or over indulged) on one of the biggest shopping days of the year, you might be feeling the pain of those decisions today. Luckily, you can create a plan to tackle the debt quickly. Not only will that restore your piece of mind, but it will let you save money on interest too.
Assess the Black Friday Damages
The first step to tackling debt is to calculate how much you have. You can review and receipts from your shopping spree, or check your account information online to get a total. If you used multiple credit sources, such as more than one credit card, then you need to check them all. Create separate totals for each card (and keep them) as well as a total across them all. Also, make sure to account for any pending charges that haven’t cleared yet to get an accurate total.
Once you have your total, you’ll have a full understanding of what needs to be repaid. If you used more than one credit card, put each card’s total in a list based on the interest rate. You’ll want to have the highest interest rate first, followed by the second highest, and so on.
Create Your Plan
If you only used one form of credit, your plan is simple; all of your extra money will go toward that debt. However, if you used multiple cards, you want to direct additional funds to the account with the highest interest rate first. That allows you to get the most out of your payments by lowering the total of the highest interest card. Often, this approach is referred to as the Debt Avalanche Method of debt repayment.
Once the first card is repaid, you can move to the second until it is repaid. Just continue down your list until all of the debts are cleared.
Finding the Money
All of your debts have regular repayment terms. No matter what, make sure to pay the minimum due on time. That way you won’t be seen as delinquent on the debt.
Now, you need to focus every spare pound on the debt with the highest interest rate. Consider cutting back on your discretionary spending to repay the amount owed more quickly. Skip anything that is a not a necessity, such as meals at restaurants. For every expense you skip, make a payment toward the debt.
You don’t have to wait until the next due date to make a payment. If you decide to save £5 by bypassing a discretionary purchase, or by picking a lower priced option on a necessity, then immediately put that £5 towards your target debt. For interest that is compounded or charged daily, quick payments help ensure you pay the least amount of interest possible.
Similarly, if you get a bonus at work or money as a gift, use that to pay down the debt. While it isn’t the most fun way to spend the money, the savings are worth it. By taking an active role in repaying your obligations, you’ll be finished in no time.