A large and burdensome debt following the Christmas and holiday season is an unwelcome experience that just about everyone has faced at least once in their lives. Even the budget-savviest people can end up with holiday debt—due to unexpectedly inflated prices, a last-minute trip, an ill-timed financial setback, inadequate budgeting during the year, or just plain overspending. But while high bills following the spend-heavy holiday shopping season are ubiquitous, they can be corrected. If your holiday spending this year exceeded your expectations, consider some tips to help get back on financial track before debt adds too much unnecessary stress to your life:
The best way to tackle any project—especially financial ones—is to start with a clearly stated goal. Gathering up your unpaid bills and credit card statements enables you to see in black and white exactly how much debt you’ve incurred. Set a clear goal for yourself about the dollar amount you need to come up with and a date by which you want to have it. Make your goal realistic so that you have the best chance of meeting it.
Every good financial plan starts with a budget of some kind. Use any recording method with which you are comfortable to help lay out the upcoming monthly expenses you can predict, as well as your regular income. Dedicate dollar amounts to each category of necessary spending (housing, utilities, car payments, insurance, fixed loan payments, etc.) and subtract their sum from your income so that you can see how much discretionary income will be left to put toward debt payment. Online budgeting apps are available to help you get started if you prefer that to a spreadsheet or ledger.
Once you have a budget with clear categories of spending, you can see which spending is essential and which types are nonessential. Cable bills, online music and video subscriptions, gym memberships, food delivery services, and other monthly commitments may include things you can live without—at least for a little while. Choose at least one category of nonessential spending to dedicate to debt repayment. It will not be forever—just until your debt is eliminated. The more money you can divert toward your debt, the sooner you can resume enjoying those suspended luxuries.
Your goal is to pay off all your debt, but you can do it best with some strategy. If your debt is spread out over various payment methods, create a priority list so that you can tackle them efficiently. Paying only the minimum payments each month is not likely to get you debt-free very fast. In addition to making each minimum payment, make additional principal payments on debts that have high interest so that you can eliminate them the quickest.
If your holiday spending is spread out over multiple credit cards, consider consolidating them onto one low-interest card. Look for incentivized balance transfers to the cards you already have that may allow many months of payments without interest. The more you can lower the interest you have to pay, the faster your debt can be eliminated.
If your budget is a little tight as is and you don’t have a lot of discretionary spending to redirect toward your debt, considering a short-term, part-time side hustle can be a helpful way to get out of debt in a shorter time. Looking into local part-time openings or even creating your own side gig from home based off of a hobby or expertise you already have may be lucrative enough to pay down debt and possibly begin building a savings for next year’s shopping.
A variety of free and low-cost personal budgeting and bookkeeping apps exist to help you get a handle on your debt and work your way to financial freedom. And while paying down your holiday debt is your most immediate and pressing goal, an equally important longer-term goal is to prevent debt from becoming one of your yearly holiday traditions. Online tech tools abound to help you set realistic financial goals, track your spending, and analyze exactly where your money is going—and how much is being wasted. The best way to prevent recurring holiday debt is to have a holiday savings to start the season with, and online tech tools can help you manage your money all year so that a little extra is available to you when Black Friday rolls around.