What to Do with Holiday Debt: Strategies for Paying It Off Quickly

1. Assess the Damage

Start by taking a clear-eyed look at how much you owe. Add up your holiday-related debt across all accounts—credit cards, personal loans, or store financing plans. Knowing the total amount is the first step toward tackling it.

2. Create a Budget for Repayment

Examine your income and expenses to determine how much you can realistically allocate toward your debt each month. Cut back on non-essential spending temporarily, like dining out or subscription services, to free up cash for repayment.

3. Prioritize High-Interest Debt

Focus on paying off high-interest debt first. Credit cards typically have higher interest rates than other types of loans, so clearing these balances quickly saves you money in the long run. The avalanche method is ideal for this—pay off debts with the highest interest rates first while making minimum payments on the rest.

4. Consider the Snowball Method

If you need motivation to stay on track, the snowball method might be better. Pay off your smallest debt first, regardless of interest rate, then roll those payments into the next debt. Seeing progress quickly can help you stay motivated.

5. Take Advantage of Balance Transfers

If your credit score is strong, consider a 0% APR balance transfer card. These cards allow you to transfer high-interest debt and pay it off interest-free for a promotional period, often 12–18 months. Be sure to pay off the balance before the promotional period ends to avoid additional interest.

6. Earn Extra Income

Consider ways to bring in extra money, such as:

• Taking on a side hustle, like freelancing or gig work.
• Selling unused items online.
• Picking up seasonal or part-time work.

Even a small increase in income can significantly accelerate your debt repayment.

7. Use Windfalls Wisely

If you received a holiday bonus, tax refund, or monetary gifts during the holidays, put them toward your debt. Applying windfalls directly to your balances can reduce interest and shorten the time it takes to become debt-free.

8. Avoid Adding New Debt

While paying down existing balances, resist the temptation to add new debt. Pause unnecessary purchases and focus on living within your means until you’re back on solid financial ground.

9. Negotiate Lower Interest Rates

Call your creditors and ask if they can lower your interest rate. If you have a history of on-time payments, they may be willing to work with you. Even a small reduction can make a big difference over time.

10. Automate Payments

Set up automatic payments for at least the minimum amount to avoid late fees and missed payments. If possible, schedule additional payments toward your highest-priority debt.

11. Stay Motivated

Paying off holiday debt isn’t easy, but it’s worth it. Track your progress regularly and celebrate small wins along the way, like reducing your total balance by 10% or paying off one credit card.

The Bottom Line.

Holiday debt doesn’t have to linger well into the year. By taking proactive steps and sticking to a plan, you can pay off your balances quickly and avoid the stress of carrying debt.

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