BURDENED WITH HOLIDAY DEBT?

Here are some tips to help lighten the load and get your finances in order for the New Year

EVERY HOLIDAY, DIANNE GAYNOR SPENDS A LITTLE more than $1,000 buying Christmas gifts. Usually she relies on her Christmas club funds--about $500--to cover some of the costs. But because she was out on maternity leave last year, she didn't put aside any extra money. However, "I decided to shop earlier this year, so that I could take advantage of sales and bargains," says the 33 year-old mother of two: a son, Christian Jordan, 1; and a daughter, Krysasia, 9.

Gaynor vowed not to run-up her credit card debt, mainly because she's gone that route before. "At age 26, I had about $26,000 in debt. Most of it came from shopping [with credit cards]; about $2,000 of [that debt] was a student loan," explains the field technician with Verizon Communications, based in New York City. Gaynor ended up using a credit counseling service to help her pay down her debt and reestablish her credit.

Gaynor has only one credit card now, a Visa Platinum, with a balance of approximately $1,000. She now knows that having good credit and using credit cards wisely is a key part of principle No. 5 of the BLACK ENTERPRISE Declaration of Financial Empowerment (DOFE), which is to engage in sound budget, credit, and tax management practices. In other words, don't run-up big balances that you cannot pay off quickly. This harms your ability to build wealth, not to mention the damage it does to your credit history.

"During the holidays, people need to learn to make a choice between credit cards and cash; they shouldn't use both," says Iris D. Atkinson-Kirkland, a debt management consultant in New York City and a lifetime member of the National Association of Black Accountants and the National Black MBA Association. But what if you overextend yourself this season with credit card debt?

Once you clear away the tinsel and pine, you need to pack away your credit cards, too. This may be only temporarily, until you get your finances back on track Your New Year's resolution should be to develop a credit plan by paying as much as possible each month to wipe out your debt quickly.

* Create and adhere to a budget. "You need to create a budget so that you know how much money you have to put toward your credit card bills," says Atkinson-Kirkland, "and figure out the maximum amount you can pay each month."

* Tackle smallest balances first. Start by spreading out all of your statements. What are the outstanding balances? What are the interest rates? Prioritize by paying off the credit card with the smallest balance. "This doesn't mean paying the minimum amount due over the next 12 months," says Atkinson-Kirkland. "But if you have a $400 outstanding balance, pay $200 now and pay off the [remaining] $200 over the next couple of months. Then, tackle the next smallest balance. All the while, you are making payments on your other credit cards."

* Cut back on unnecessary spending. If you are feeling a financial squeeze, you might be wondering where the money is going to come from to pay off your debt. You will have to make some sacrifices. From January to March, take your lunch to work everyday and use that $300 to $600 (at $25 to $50 a week) savings to pay down your debt. You may have to forego hanging out with the girls or the guys every Friday night for a few months. Of course, you have to know what you are spending before you know where to cut.

* Pay on time. Once you pay off that first credit card, take the money that you were putting toward that card and use it to help pay off another card. "Pay your bills on time all the time," adds Steve Rhode, president and co-founder of Debt Counselors, a debt-counseling service based in Rockville, Maryland. "In fact, [credit card] companies are shortening their grace periods," he says.

* Get professional help. If you lack the discipline or negotiating skills to handle creditors on your own, you can seek the assistance of debt counseling organizations, such as Consumer Credit Counseling Services (www.debthelpnow.com) and Genus Credit Management (www.nccs.org). These groups will help you negotiate lower rates on credit cards and set up an automatic payment plan with your creditors.

* Invest newfound money. As you work to reduce your debt, start looking for ways to invest additional monies in CDs or mutual funds. Establishing an investment portfolio is the greatest gift you could give yourself next Christmas. Gaynor has begun investing in her company's 401(k) plan, contributing 16% of her annual base salary. She also has a couple thousand dollars saved in short-term CDs.

Keep in mind that you aren't going to get out of debt overnight. If you have built up a lot of debt between October and December it may take you at least 12 months to get out of debt. Stay the course and set aside a little something extra for future holiday shopping sprees. While you don't have to be a Grinch next Christmas, you may have to be a Scrooge in the months before the Yuletide season.

DECLARATION OF FINANCIAL EMPOWERMENT

From this day forward, I declare my vigilant and lifelong commitment to financial empowerment. I pledge the following:

1 To save and invest 10% to 15% of my after-tax income

2 To be a proactive and informed investor

3 To be a disciplined and knowledgeable consumer

4 To measure my personal wealth by net worth, not income

5 To engage in sound budget, credit and tax management practices

6 To teach business and financial principles to my children

7 To use a potion of my persona wealth to strengthen my community

8 To support the creation and growth of profitable, competitive black-owned enterprises

9 To maximize my earning power through a commitment to career development, technological literacy and professional excellence

10 To ensure that my wealth is passed on to future generations