The winter holiday season is often prohibitively expensive. Between travel, planning parties and cooking a holiday meal, you may spend hundreds or even thousands of dollars, to say nothing of the amount of money you may spend on gifts.
Particularly if your family has had a rough year or has struggled financially recently, you may find yourself going a little overboard to make the holidays a positive experience. All too often, that could mean purchasing on credit items that no longer have much meaning once they are ripped out of their wrapping paper.
Now that spring is fully underway, if you so have major outstanding balances on your credit cards due to the holidays, it may be time to ask yourself whether your debt level has become unsustainable.
Making minimum payments leaves you increasingly disadvantaged
Many people who make charges in November and December and think that they will tighten their financial belts after the new year don’t make up for that extra spending. If more than a month or two have passed since the holiday shopping season and you still have major balances, you could wind up paying way more than what those gifts were really worth.
With high interest rates and the potential for over-limit fees and other finance charges accruing on your credit cards, those basic holiday gifts could eventually cost you several times more than what you actually paid for the item itself. Especially if you still charge other things on your cards, the ever-higher balances on your credit cards could make it harder and harder for you to pay for your basic cost of living expenses.
Credit card balance transfers are a bandage on a deep wound
Many people make the mistake of taking out more debt to address their existing debt. Whether you open a new credit card and transfer a high balance over to take advantage of lower promotional rates, or you take out a debt consolidation loan, the potential always exists for you to continue accruing more debt.
The more outstanding, unsecured debt you have, the greater your struggles with your budget will become. Transferring balances from one account to another will not address the underlying problem and can increase the total amount of debt you have. Bankruptcy, on the other hand, results in a discharge that reduces your repayment obligations.
If you can’t foresee yourself reasonably paying off you’re unsecured lines of credit within the next year or two, bankruptcy can offer you a discharge and a fresh financial start. Instead of struggling with ever-increasing levels of debt, filing for personal bankruptcy lets you get rid of your existing debt and start with fewer obligations, allowing for better budgeting practices in the future.