Now that the holidays are over, many people find themselves reeling from the amount of debt they’ve managed to accumulate while making their holiday purchases. Some people started the season with a budget only to succumb to a shopping frenzy at the last minute. Others spent blindly without having any idea how much they’d spent until the bills came in January. No matter how what your spending style was, you may be among the many who now find themselves experiencing holiday debt hangover.

Fortunately, holiday debt doesn’t have to loom over your head forever. By getting motivated to rid yourself of your debt and committing to take action, you can wash your hands of your holiday debt and enjoy the rest of your year.

Add up all of your holiday debt. The first step to getting rid of your holiday debt is to know exactly how much there is. Gather all of your holiday bills into one place and add them together. As scary as the number might be, rest assured that this is as big as it will get. From now on, the number will only get smaller.

Stop creating new debt. Knowing the exact amount of your holiday debt is important, but stopping its growth is even more important. Until you have vanquished all of your holiday debt commit to only spending cash or using your debit card. The key here is to spend less than you make.

Make regular payments on your debt. Take a look at your finances to determine what your monthly payment should be. Once you’ve decided what that amount is, be sure to pay that much each month. Remember that you’re not just trying to make the minimum payment. You want this holiday debt out of your life.

Find extra money to send to your creditors. Make some small sacrifices to enable you to make larger payments on your holiday bills. You don’t have to give up every little luxury in your life; just pick one or two and consistently add that money to your payments. An example might be to give up raiding the vending machine at your office every afternoon. If you regularly spend $1.50 on a soda and snack, you could expect to have an extra $7.50 for your debt payment each week. It doesn’t sound like much, does it? But at the end of the month you’ll have an additional $30 to add to your payment.

Keep saving after you’ve nixed your holiday debt. When you’ve defeated your holiday debt, plan to keep saving your monthly payment amount for the next round of holiday spending. By putting this money away now, you won’t be doomed to repeat the holiday debt cycle again next year.

Getting rid of your holiday debt can seem like an impossible task when you first get started. Take heart and remember that there are many people in the same situation as you. With a little resolve and discipline you can make your holiday debt ancient history in no time.

No Credit Needed, a personal finance blog, has made an interesting post about debt profiles of personal finance bloggers.  Bloggers were asked to answer a short questionnaire regarding their use of debt, and the results were compiled in the following 4 categories: 

1.  Rate conscious borrowers.

2.  The practical borrowers.

3.  The housing borrowers.

4.  The non-borrowers.

Not Made Of Money was placed into the non-borrowers category.  However, we did borrow money to purchase our home and have a mortgage.  The only reason we have not paid our mortgage off in full is that we do not think we will live in this house forever.  Our mortgage is at a fixed rate and we put a substantial down payment on the home when we purchased it.  We also found a lender who agreed to let us pay our own property taxes and insurance instead of collecting them through escrow.  We have a credit card that we do not use. 

So, how exactly do we feel about borrowing?  We absolutely do not believe in borrowing money.  We never wanted to be in debt, which we felt would limit our options in a lot of family life matters. 

When we got married, we made the decision that we would never incur debt.  We each came into the marriage debt free so it was easy to start from scratch.  This has served us well through the years, because we set up our financial system to be a debtless one.  Here are some of the principles we have used:

1.  We spend less than we earn.  Always have.  That means we have not had the newest stuff like DVD players, TVs, cars, etc.  We have always had what we needed and paid for things with cash. 

2.  Our emergency fund has been fully funded to weather the occasional unexpected expenses.  Then, when we have needed to pay for a car repair or medical bill, we have re-funded the emergency fund. 

3.  We’ve never bought a new car, only purchased used ones and have always paid cash.

4.  We set up a budget based on what we could afford to spend, and we stick to it.

5.  Our finances are kept up to date using the Quicken program.  

Now that I’ve discussed some of the methods we have used, I will share the benefits of living a debt free life.

1.  When we began to have children, I was able to quit my full time job and stay home with the kids.  We did not have the financial pressures to deal with because we had been living on one income all along and did not have debt to worry about. 

2.  We do not have the stresses of bill collectors or wondering where we will find the money to pay the next bill.

3.  We have been able to give financially to those in need (tithe).   

We have studied the methods promoted by Larry Burkett, and can highly recommend his book “Debt-Free Living”.  

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The Carnival of Personal Finance #74 is up over at A Geek’s World.  This week’s carnival was very large, with 71 participants!  NotMadeOfMoney participated with our post We Don’t Have Debt.