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6 tips to get out from under holiday debt in 2013

Awallet-emptying shopping binge and New Year’s debt hangover are mainstays for many consumers.

And now that the holiday bills have arrived, many face the daunting task of whittling down the mountain of often high-interest credit card debt before it gets out of control.

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That task is made more difficult this year because most paychecks have been reduced because Congress and the White House allowed a two-year reduction in Social Security payroll taxes to lapse at the end of December.

Although many cardholders have kept their credit card debt relatively low since 2010, their average debt is expected to grow by roughly 8 percent to $5,446 by the end of this year.

That’s the highest level in four years, according to credit reporting firm TransUnion.

Here are six tips on how to detox your finances this year.

1. Tally up what you owe — First on the debt to-do list is to take stock of the damage. That means reviewing credit card bills, bank statements, and other accounts to determine how much you owe and how that translates into monthly payments.

Specialists also recommend getting a copy of your credit report if you haven’t done so in more than a year.

Consumers are entitled to get a credit report from the three nationwide credit reporting companies free of charge every 12 months. Copies can be obtained at AnnualCreditReport.com.

A credit report can help you understand how your debt, and your payment history, will be perceived by potential lenders.

It also underscores the need to bring down card balances, as high balances are viewed as a sign of risk.

2. Draw up a payment plan — Paying down credit card debt requires discipline.

One oft-advised strategy for borrowers carrying balances on two or more credit cards is to rank the cards by their interest rates and then make the biggest monthly payment on the card with the highest interest rate.

For the rest, only make the minimum monthly payment. The process is repeated once the card with the highest rate is paid off.

Remember this: If you used credit cards to take advantage of holiday sales, you may quickly lose any savings because you’re allowing balances to linger.

3. Consider a balance transfer — A survey by Consumers Union, the publisher of Consumer Reports, found that half of the respondents are racking up interest charges by carrying a balance.

For those who don’t have a pile of cash that they can draw upon to pay down their debt, the next best option is to lower the interest charges.

You can ask your credit card issuer to do you the favor, but don’t count on it. A more realistic option is to consolidate your card balances into another card with a lower interest rate.

Many card issuers extend balance transfer offers, with some providing an introductory period of a year or more to pay off the transferred balances at no interest.

4. Make a budget, follow it — Make a budget of your fixed household expenses, such as your mortgage or rent, utilities, car loan, insurance, and so on. Carve out a realistic amount of money for more variable costs, such as gas, groceries, and entertainment.

Once you figure out a monthly plan that allows you to pay down your card debt, even if it means scrimping here and there, stick with it.

Computer and mobile phone apps designed for tracking expenses abound. Your bank likely already has an app that can help you to keep up with charges on your accounts.

5. Use credit, don’t abuse it — The best way to get back on the right financial track is to get in the habit of paying off any charges on cards right away, says Norma Garcia, manager of the financial services program for Consumers Union.

‘‘When you use a credit card, you’re tapping into a deficit — unless you plan to pay for it — rather than a reservoir of savings,’’ she says.

6. Get help — Feeling overwhelmed by debt? Counseling agencies approved by the Department of Housing and Urban Development offer free credit counseling, advice on making a personal budget and dealing with creditors. They can be found on www.hud.gov.

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