Do your credit cards have a holiday hangover?

Jean Chatzky TODAY Financial Editor • Profile • E-mail

It was fun while it lasted, but if you spent too much money over the holidays, you might be having second thoughts about it now that those credit card statements are showing up in the mail.

Most of us go through life — especially at the holidays — spending mindlessly. We don't have any idea how much damage we did until we see the numbers on the credit card, particularly because we tend not to count things other than gifts (cards, wrapping, postage, and those things we bought for ourselves while we were out shopping). So what can you do? We asked readers to send in their questions about digging out of the debt. Here's my advice:

Now that I look back at the things I have purchased for holidays there is nothing really there for me to enjoy. I buy things to make me feel good, and at the time it always does. But then when I get the bill, I am sick to my stomach. I try to tell myself "Oh, you only live once." But truthfully, I want to be able to buy a house one day and not worry about all this stupid debt I have racked up. What's your advice?
— Elisa

Aha — you've happened on the secret. And perhaps the fact that you came to this realization yourself will help it sink in. It doesn't for most people, but here's the truth. Buying things — beyond those you need to put a roof over your head, clothes (not designer ones) on your body and food on the table — doesn't make people happy. Moreover, although getting the things we want may make us feel good momentarily (as you discovered), they never make us as happy as we think they will for as long as we think they will. But in the very same way, you need to understand that not getting those things will not make you as disappointed as you think it will. Just like our bodies have an immune system to fight off disease, our psyches have an immune system to fight off disappointment. That's why, when that cute guy or girl from chemistry class broke up with you all those years ago, you could immediately come up with a dozen reasons why you didn't like him anyway. Figure out a way to walk away from those purchases — take a breath, put them on hold, turn off the computer. Whatever you have to do to take that purchasing pause, that's the secret to your financial success. Instead, put the money in savings, watch it add up, tape a picture of that dream house to your fridge — or better yet, put it in your wallet right next to those credit cards — and feel good about that instead.

I am 23 years old with $12,000 in credit card debt. I am a smart girl in graduate school and make decent money, and have nothing to show for it. I did consolidate my debt which helps, but this past holiday I spent $1,500 and I'm off track, yet again! I even got another credit card to pay for the holidays. Soon I will not only have to pay credit card debt, but school loans as well. Please help.
— Christine

Christine: Stop the madness. Seriously. What you need is to put a halt to your borrowing, then the decent amount of money you say you earn should enable you to dig yourself out. We know from research that about one-third of people who consolidate credit card debt then go out and charge their cards right back up again. That's precisely what you did. So, no more consolidations. No more applying for credit. Work with the cards you have. Call and ask them to lower their interest rates. Then, starting with the card with the highest rate, pay as much as you can on that card and the minimums on the rest. When that card is paid off, retire it (don't close it, that'll hurt your credit score) and move on to do the same with the next highest rate.

I've been drowning in debt since the summer when my job cut hours, cut benefits and cut pay. Before that happened I bought a new scooter, a new computer, and went on a two-week vacation thinking I was secure in my earnings. I've gone from investing $200 a month, putting $300 a month into my 401(k) and paying all of my bills ahead of time, to having a $300 a month deficit. I didn't even have a Christmas this year. I can't find another job that pays me the salary I had before the cutbacks, and I keep getting deeper and deeper into debt by not making my payments on time. What can I do?
— Joe

Money 911 with Jean Chatzky   Advice on mortgage payments   Taking control of your finances   Paying off credit card debt, building savings   Living with loans, saving for your future   Help with your 401K, mortgage payments

Joe: You have to start making payments on time, even if you can just pay the minimums. Your late payments are going to ruin your credit score, and quickly, and that could hurt your ability to get that next great job. You can't get money back from that vacation, but you may be able to ease your burden a little bit by selling some of the other things you bought, like the scooter and the computer. For now, you may not be able to find a job that pays what you were making before cutbacks, but perhaps you could find a job at a bookstore or bartending during evenings that would make up the $300 difference until you right your ship again.

My husband and I made the painful decision to file for bankruptcy. The only reason I was able to buy my 7 year-old daughter everything she wanted for Christmas is because I spent the money that people sent me for Christmas, money that could have gone toward other expenses. We are 30 and there is SO much we want to do, and so many things I want to give my daughter that I'm not able to. What is your advice?
— Stephanie

Your daughter — at age 7 — does not need to get everything she wants. I've had two 7-year-olds, they're now 10 and 13 and, let me tell you, 7-year-olds who get everything they want become teenage monsters who demand everything they want. What your 7-year-old actually needs are parents who are financially stable. Those are the sort of parents who don't lose the house or the cars and who can help pay for college. By filing bankruptcy, you got something resembling a financial adjustment. You need an attitude adjustment to go with it.

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Jean Chatzky is an editor-at-large at “Money” magazine and serves as AOL’s official Money Coach. She is the personal finance editor for NBC’s “Today” show and is also a columnist for “Life” magazine. She is the author of four books, including “Pay It Down! From Debt to Wealth on $10 a Day” (Portfolio, 2004). To find out more, visit her Web site, www.jeanchatzky.com.

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