NEW YORK (CNN/Money) -
You bought the perfect holiday gifts for your family and friends, along with a little something for yourself. While that December merrymaking may seem priceless your January MasterCard statement will remind you that it was not.
Now, it's time to start tackling your debt.
Phil Harriman, a financial adviser with the Million Dollar Round Table, says monthly debt obligations -- credit cards, auto loans, etc.-- should equal no more than 40 percent of discretionary income.
Even then, your "good" debt should outweigh the "bad."
"Good debt would be to borrow money to remodel your bathroom or kitchen or add a deck to your home -- something that would build equity on an asset," Harriman says. Student loans tend to fall into the good category, as do mortgages.
Credit card debt, however, tops the list of items you're much better off without.
The average American family carries $9,200 of credit card debt, according to Cardweb.com. And about one in four to five households are struggling to pay off their credit cards, says Chris Viale, president of the Cambridge Credit Counseling Corp.
Ready, set, pay!
Paying that $9,200, or whatever you owe, won't be easy but here are a few tricks that can help you pay it down faster.
Know what you can afford. Track your expenses for at least 30 days will give you a clear idea how much you are spending on variable expenses, such as food or clothing, compared to your fixed expenses.
Identify areas where you can cut back, such as eating out, and use that extra money to pay down your debt. Also note that cutting back shouldn't mean cutting out.
"Budgets are doomed to fail because people cut out all of the fun in their life," says Jim Tehan, a spokesperson for Myvesta. "People need to have leeway."
Pay more than the minimum. If you have the cash, starting doubling or tripling the minimum payments on your highest rate card.
Have a specific timeframe? CNN/Money's debt reduction calculator will determine how much you should be paying each month to hit that deadline.
Automate. If you can't afford to double your minimum payment, set up an automated bill payment that deducts $10 from your checking or savings account each week. You probably won't miss that $10 by the end of the week and you'll save on compounded interest fees.
Save the date. Avoid late fees by tracking your payment due dates. Setting up a separate automated payment for the minimum balance will help you stay on target.
Stay put. As tempting as some of those credit card offers are, try not to play the balance transfer game too often, as it will adversely affect your credit score. A better strategy would be to ask your existing creditors for a lower rate.
Those with solid payment histories are likely to qualify for the best rates, but that shouldn't deter you from at least asking even if you've missed a payment here or there.
Lose interest
You are not necessarily locked into the original terms of your mortgage, auto, or student loans. So, if you haven't done so already it's time to refinance those interest rates.
If you can handle a bigger monthly mortgage payment, opt for 15-year fixed-term instead of the conventional 30-year loan. For others, adding a few hundred dollars each month for the principal may be less painful than forking over several hundred for a 15-year home loan.
You can shave a lot of money off your overall interest payments by making bi-monthly payments. Because of the way they're structured, you'll also squeeze in an extra payment by year's end.
Keep your cash
Viale notes that many consumers apply their extra cash towards paying down debt -- only to use their credit card when an unexpected expense pops up.
Experts advise consumers to save 10 percent of their take home pay. If that's simply too much, aim for 5 percent. As long as you are saving money on a consistent basis you are building a cash cushion that will allow you to handle any unforeseen events without relying on a credit card.
If you are about to take out a loan, be it for a house or school, know your ABCs: Always Borrow Conservatively. Don't take out more than you need.
Some people may want to hire a professional to help them with their financial planning. Click here to learn how to choose one.
Even with the best professional advice realize that digging yourself out of debt will take some time and even more discipline. Then again, that's what any New Year's resolution requires.
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