Pay off credit cards in new year

Entering a new year with old credit card debt isn’t ideal, but it’s not unusual, either. In fact, it’s something of an American tradition to overspend at the end of the year during the holiday season, sometimes with little or no plan to pay off that newly acquired debt.

However, with the right strategy, you can get rid of your credit card debt, including your new holiday debt, sooner than you think. By creating a personalized debt repayment plan, you’ll reduce the amount you pay in finance fees and be back in the black in record time. This step-by-step approach can get you there. maximize it.

Consider all the feasible ways you can spend less or earn more without adding undue hardship to your daily life. For example, you may have signed up for three streaming services, costing about $30 total. If you rarely watch all of them or feel like you can do without them for a while, cancel them today and add that figure to your fixed debt payment. Have you been thinking about starting a side hustle? Now would be a good time to do so. If you choose a side hustle with little to no operating costs that takes little effort, you can hopefully bring in at least an extra $100 a month.

The most important factor while creating this plan is to be realistic, because the figure you end up with will be fixed for the lifespan of your plan. This is not a matter of can you do it, but will you.

Don’t be afraid to pursue professional assistance

“Reducing credit card debt is one of the most common New Year’s resolutions, and for good reason. If you’re behind on your monthly payments, paying only the minimum amount due, or being forced to choose between several payments each month, it’s time to seek professional help in achieving your resolution.”

Former vice president of finance, Capital One

A good credit counselor can assist you in reaching your goals, which may include setting up a debt management plan.

APR: 21 percent

Your monthly payment: $100 Credit card C

Balance: $2,000

APR: 17.74 percent

Your monthly payment: $50 With this arrangement, you would be out of debt in 16 months and would pay $941.35 in interest, according to Bankrate’s Debt Paydown Calculator. If you did not reallocate your payments, it would take you over five years to escape the debt and cost $3,079.91 in interest.

Debt avalanche alternatives

The debt avalanche method isn’t for everyone. If you think you’d do better with a different type of payment plan, consider using a:

Debt consolidation loan: You may be able to pay off your debts with a personal debt consolidation loan that has an APR lower than the average of those on your cards.

0 percentAPR balance transfer card: You can shift all or some high interest credit card debt to a new balance transfer credit card that doesn’t charge interest for a set period of months. If you repay the debt before the regular rate goes into effect, all it will cost you is a balance transfer fee, typically between 2% and 4% of the amount you transfer.

Debt management plan: Nonprofit credit counseling agencies offer debt management plans that allow the debtor to make one affordable monthly payment to their agency as opposed to multiple creditors. The agency then disburses those payments to your creditors on your behalf. In exchange, you typically have lowered interest rates and can get help negotiating down your debt if possible.

Unlike many other kinds of insurance, Medicare Part A and Part B don’t have maximum out-of-pocket caps. There’s no limit on what you could owe as copays and coinsurance add up.

“Original Medicare without Medigap would be perilous because we need Medigap for the out-of-pocket limit,” Michael Dayoub, a certified financial planner in Savannah, Ga., said in an email.

Buying a Medigap policy is one way to put a cap on your yearly costs. Paying more upfront for premiums could pay off by limiting your future out-of-pocket spending.

You can expect to pay $100-$150 per month or more for the most popular Medigap plan, Plan G, when you sign up at age 65. And premiums can go up based on plan type, age, location and sometimes health status.

That’s a significant added expense — so is it worth it? Giardini-Russell compares Medigap to car insurance, which you pay for each month, even though you hope not to need it. “It comes down a lot of times to the psychology and peace of mind,” she says. “Are you willing to pay $150 per month for peace of mind?”

“We tend to hear from beneficiaries that they are very satisfied with their policy,” Greiner said. Medigap is worth it if you can afford to pay the Medigap premiums along with your premiums for Medicare Part B and a Medicare Part D prescription drug plan, according to Greiner.

If Medigap isn’t affordable, you might want to look into programs that can help with Medicare costs, such as Medicare Savings Programs and Extra Help subsidies.

People who can’t afford Medigap premiums could also consider Medicare Advantage, according to Dayoub. Medicare Advantage plans are bundled alternatives to Original Medicare sold by private insurance companies. They have out-of-pocket limits, but there are trade-offs to consider, such as limited provider networks.