Start The New Year Without A Cash Advance

For many people, the beginning of a new year signifies an opportunity for a fresh start. From small resolutions to life altering changes, people tend to put thought into action at the beginning of year. However, the motivation to keep up with these changes often fades before spring, so it is essential to use this goal-oriented time to enact finance and budget habits that will persist throughout the year. Unfortunately, the high cost of the holiday season often rolls over into the New Year, making it difficult for individuals to avoid costly cash advances.

Directly following the holiday season, the New Year is often wrought with credit card debt. Many families overextend their budgets during the season, leading to uncomfortable post-holiday living. The accumulation of credit card bills may restrict the amount of expendable income that one has and thereby cause more credit reliance. For instance, if an individual over spends on credit cards during the holiday season, he/she may be faced with hundreds of dollars in monthly credit card payments come the new year. When money is already tight, many pay only the minimum payment required; in turn, this debt can persist for months, tainting the New Year with last year's over-indulgence. This increase in monthly bills may lead an individual to withdraw a credit card cash advance to cover monthly expenses. Yet, using these advances to pay off credit debt is bound to backfire, as these types of advances carry high interest rates which will increase monthly fees if not paid off quickly and in full.

So, how can those who overspent during the holidays reestablish a comfortable budget without resorting to cash advances?

The following is a compilation of preventative and reactive tips that can help individuals keep their financial New Year resolutions without depending on credit cards.

*Prevent cash advance reliance in the New Year by budgeting before the holiday season. Trying to establish a budget with a savings account during the holidays will likely be a failed endeavor, as the increase in out-going funds will make it difficult to establish budget habits that are not already in place. Thus, it is important to start a budget early in the year, anticipating the expenses of the holiday season and saving accordingly.

*Yet, for those who didn't establish a holiday savings account, one can react to post-holiday credit debt by dedicating as much money as possible each month to the card payment, paying beyond the minimum to eliminate said debt more quickly. This can be done in few ways: an individual can sell unneeded or outdated items, pick up a second job, and/or limit other expenditures to cover the cost of the credit debt. Making extra money early in the year will help eliminate holiday debt and can pave the way to a more financially stable future.

*Furthermore, individuals can react to debt by using their tax returns to pay off credit cards. Although not everybody will receive a substantial tax return, for some individuals tax season is like an extra payday. Using the tax return to payoff credit debt is a smart move, as it allows an individual to free up extra monthly money without the hardship of taking on more work hours.

After the holiday debt is removed, individuals can eliminate cash advance reliance and begin to foster smart budget habits, such as a savings account for next year's holiday season.

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