How to cure a holiday debt hangover

Yes, dry January is almost over, but many of us are still nursing a holiday-debt hangover.

More than a third of Americans say they overspent this past holiday season, according to WalletHub, which canvassed Americans for its Post-Holiday Shopping Survey.

Some other worrisome findings: A quarter of people say they already regret their holiday purchases. Meanwhile, 22% say it’s going to take three months to pay off those holiday bills, 11% say six months, and 13% say it will take the whole year, by which time it will be Christmas and Hanukkah and Kwanzaa all over again, writes Chris Taylor.

That’s especially alarming considering the average credit card interest-rate is now up to 19.85%, the highest on record, according to financial information site Bankrate.

How can consumers defuse a debt bomb and make sure it does not explode again next year? 

First and foremost, play the interest-rate shuffle and transfer your credit card balance to a card on which you’ll pay 0% for an introductory period. Bankrate’s Ted Rossman is a fan of the Citi Simplicity, the Citi Diamond Preferred, the BankAmericard and the Wells Fargo Reflect cards.

“They all offer 0% balance transfer terms up to 21 months, the longest on the market,” says Rossman, Bankrate’s senior industry analyst. 

Click here for more expert advice on digging out of the holiday debt hole.

REUTERS POLL 📊

There’s a good chance you’re still paying off bills for last year’s holiday shopping and travel. Roughly $80 billion in credit card debt was added in the last quarter of 2022 alone, on top of the approximately $95 billion racked up in the first three quarters, WalletHub says.

How much holiday credit card debt do you have now? Answer our poll here.

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🏈The NFL Star Tackling Financial Literacy🏈

You might know I hail from the Philadelphia suburbs. And you might also know that Philly sports fans are legendary for their die-hard, um, “rowdiness.”

So I was especially excited to commission this recent article about Ndamukong Suh, a defensive tackle for my beloved Philadelphia Eagles.

As much as Suh enjoys sacking quarterbacks and tackling running backs – the Philadelphia Eagles are on a playoff push hoping to reach the Super Bowl – there’s something else he enjoys just as much: Teaching children about financial literacy.

Guided by his parents, Suh grew up with a great work ethic as well as money-savvy skills. Indeed, when he entered the National Football League his credit score was near the exceptional range of almost 800.

"That was all thanks to the lessons my mom gave me," Suh says.

And while there have been many tales of professional athletes whose careers are followed by financial woes, Suh has been mapping out his post-football life for years.

You can read more about his diverse investments, charitable giving priorities and financial mistakes (we all have them!) here.

Oh, and … FLY EAGLES FLY!!!

🦅🦅🦅

Is it time to invest in China? 🧧

Chinese stocks have surged in value since China ended its zero-Covid policy. But John Stoltzfus of Oppenheimer Asset Management explains why he thinks there are better ways to make the reopening play - by looking for investment opportunities outside of China. You can watch his interview here.

A$K LAUREN

Q. Should I keep sending my 529 college savings plan a monthly deposit and should I continue investing in a growth mutual fund or shift to a more conservative investment option pegged to a high school graduation date?

– Anonymous

A. The timing of this question could not be better, as I have a first-year college student, a 529 savings plan – which lost a lot of money last year – along with a very hefty tuition bill.

Here is what four financial advisers have to say:

The best way to save for college is to do it through monthly deposits, also known as dollar-cost averaging, ideally in a 529 college savings plan, says Erin Christy, a wealth management director with Choreo.

“Investing a steady amount each month can reduce the overall impact price volatility has on your portfolio,” Christy says.

With more growth potential comes more risk, though, so a growth fund might be a good option if your college savings will not be needed for another 10 to 15 years, allowing time to recover from recent volatility. But as graduation nears, step back to a more conservative allocation, Christy says.

The easiest way to do that is to use a target-date fund in your 529 plan, which gradually becomes more conservative over time, essentially putting the need to adjust the portfolio allocation on autopilot.

However, Katie Mietus, a wealth manager with Coldstream Wealth Management, notes that while markets are down, it may make more sense to look at funding your child’s 529 account with a lump sum right now instead.

If your kid is still many years away from attending college, chances are, you can afford to be in a more aggressive asset allocation because you have time to wait for stocks to recover, Mietus notes.

“Adding as much as you can now while everything is ‘on-sale’ will allow for a larger recovery over the long run in a diversified portfolio, on top of tax-free growth along the way in the 529 account,” Mietus says.

A warning: Be careful switching around any investment options in a 529 account while markets are down. If you move out of stocks into something more conservative, you may accidentally be locking in losses.

A 529 plan is not the only college-savings option, says John Cervantes of TCA Financial Group LLC, who is affiliated with Prospera Financial.

“The best answer depends on your situation,” Cervantes says. Some factors to consider: Do you have more than one child? How old are they? Have they shown an aptitude academically?

“There can be multiple ways to accomplish a goal, so working with a qualified financial adviser can help you balance your objectives with your risk tolerance,” Cervantes says. The right adviser will ask the right questions to help keep you on track for your family’s needs and goals. 

Finally, John Guthery, CFA, chief investment officer of FusionIQ, reminds us that the time horizon for college is often shorter than you think. 

“Unlike retirement, which can be on the horizon for decades, you go to sleep one night, and your kids are three, and you wake up, and they are submitting applications,” Guthery says. (I can confirm this is true! ) “Implementing a strategy that helps lower risk as senior year approaches just makes sense.”

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