Avoiding the stress of holiday debt - WALB.com, Albany News, Weather, Sports

Avoiding the stress of holiday debt

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December 13, 2005

Albany--If you overspend before Christmas, you may be sorry after Christmas when your credit card bills come in the mail.

Too often holiday shoppers spend more than they can afford during the holidays.

Along with the arrival of the Christmas season, comes much stress for shoppers.

"It's very, very hard to fit everybody on a so called quote unquote budget you have every year," say April Hawkins.

Hawkins works two jobs to avoid racking up high bills during the holidays. "My main goal is to go into 2006 kind of debt free, no bills, no outstanding this, no outstanding that," says Hawkins.

"If you don't have the funds to pay all of your debt, then your secure debt should be paid first," say credit counselor, Irma Whitten, Whitten says anyone who reports to the credit bureau regularly is who you want to pay right away.

"Of course, you want to always pay your secure debt first, and that would be your home, your automobile," says Whitten.

As many shoppers use their credit cards this season, many cards offer grace periods.

"If it indicates you have a grace period, then certainly you could use that grace period," says Whitten.

She also says as long as you pay your bill within the grace period, your credit score won't be lowered as for medical bills, "You could put that on the back burner. Next month, realizing you should really catch that lost payment up," she says.

While some payments can wait, budgeting is a must for shoppers like Hawkins.

"I'm a big movie, and CD lover, so I'm trying to cut back on those little extra expenses, so I can get in the bills and Christmas gifts," says Hawkins.

Whitten says it's the best way to avoid debt and a bad credit rating. "Simply decide what you're going to spend on everybody, prepare an envelope for everybody, put your money in there, once you've spent that money, you know that you can't anymore gifts," she says.

But if you have problems paying your debt this season, don't be afraid to ask for help. "You should always contact your creditors and inform them of the situation. they need to know if you're having a problem paying the debt," says Whitten.

While some credit cards may give you a couple of weeks of leeway, the bottom line is you still have to pay your bill. Otherwise, you could be stuck with higher interest rates, and a lower credit score.

Lenders use credit scores to determine credit risk. Having a good score can open the door to low interest rates for things like cars, credit cards, and home loans.

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