How to Get Rid of Post-Holiday Debt

Many people consider spending time with loved ones as the meaning of the holidays, but it’s undeniable that the end of the year can be an expensive time for many. Between buying gifts, participating in workplace festivities, preparing special meals and traveling, it’s all too easy to find yourself saddled with holiday debt at the start of the new year.

In fact, a survey from MagnifyMoney found consumers who took on holiday debt actually used more credit than they did the previous year — accumulating $1,230 in 2018 as compared to $1.054 back in 2017 and $1,003 in 2016. So, in addition to surpassing the $1,000 threshold, it’s on an upward trajectory year over year.

Perhaps what’s even more alarming is the survey’s finding that 49 percent of respondents felt the debt would take five months or longer to pay off; over one-fifth (22 percent) said they plan to make only minimum payments on it.

The last thing you want to do is stay stuck in debt all next year, then feel pressured to rack up even more expenses come next holiday season, right?

Here are five tips on how to effectively get rid of post-holiday debt. 

Revamp Your Spending Plan

The holidays can be quite hectic, but the start of a new year is an ideal time to revamp your spending plan. The first step is simply tracking expenditures, either by logging them into a spreadsheet template or using an app to automatically track expenses by category. Only then can you decide how to budget more effectively — like cutting out non-essential costs and using those extra funds to more aggressively pay down debts. 

Put a Pause on Credit

Buying on credit can fuel the debt cycle, especially if you get in the habit of making only minimum payments on your balances. This gives interest the ideal conditions to grow in the background, meaning it’ll take much longer to pay off debt and will cost more over the long run.

Try switching to a cash-only spending plan following the holidays. There are a few potential advantages to trying this — especially the fact it’ll force you to really evaluate your budget and decide how much you can afford to spend on living expenses vs. how much you should be setting aside to put a dent in your debts.

Many people consider spending time with loved ones as the meaning of the holidays, but it’s undeniable that the end of the year can be an expensive time for many. Between buying gifts, participating in workplace festivities, preparing special meals and traveling, it’s all too easy to find yourself saddled with holiday debt at the start of the new year.  In fact, a survey from MagnifyMoney found consumers who took on holiday debt actually used more credit than they did the previous year — accumulating $1,230 in 2018 as compared to $1.054 back in 2017 and $1,003 in 2016. So, in addition to surpassing the $1,000 threshold, it’s on an upward trajectory year over year.  Perhaps what’s even more alarming is the survey’s finding that 49 percent of respondents felt the debt would take five months or longer to pay off; over one-fifth (22 percent) said they plan to make only minimum payments on it.  The last thing you want to do is stay stuck in debt all next year, then feel pressured to rack up even more expenses come next holiday season, right?  Here are five tips on how to effectively get rid of post-holiday debt.   Revamp Your Spending Plan The holidays can be quite hectic, but the start of a new year is an ideal time to revamp your spending plan. The first step is simply tracking expenditures, either by logging them into a spreadsheet template or using an app to automatically track expenses by category. Only then can you decide how to budget more effectively — like cutting out non-essential costs and using those extra funds to more aggressively pay down debts.   Put a Pause on Credit Buying on credit can fuel the debt cycle, especially if you get in the habit of making only minimum payments on your balances. This gives interest the ideal conditions to grow in the background, meaning it’ll take much longer to pay off debt and will cost more over the long run.  Try switching to a cash-only spending plan following the holidays. There are a few potential advantages to trying this — especially the fact it’ll force you to really evaluate your budget and decide how much you can afford to spend on living expenses vs. how much you should be setting aside to put a dent in your debts.  Explore Debt Relief Strategies If you’re facing significant debt — say $10,000 or more — that’s worsened due to the holidays, it may be time to explore a more heavy-duty solution. Debt relief is one of the ways people have dug themselves out of thousands of dollars in unsecured debts. Creditors may agree to lower the amount owed for consumers in a debt relief program, provided a repayment schedule can be worked out.  You might be wondering, “Is debt relief legit?” The short answer: It can be. Making debt relief work for you depends first on finding a reputable program with a good track record of success, plus avoiding scams looking to prey on vulnerable people who owe money.  Try a Balance Transfer Interest rates can make a big difference in how easy or difficult it is to pay back debt, and those attached to credit cards tend to be quite high on average. One possible route is transferring your balance from a card with a high annual percentage rate (APR) to one with zero interest. Of course, this magical introductory period will end at some point — but you can take advantage of zero-percent interest to pay down the principal balance in the meantime.  Start Saving for Future Holidays Last but not least, you’ll want to make sure you avoid accumulating more debt throughout the year as the holidays approach. One way to do so is opening a savings account earmarked especially for holiday spending, then transferring a small amount of each paycheck. When the next holiday season rolls around, you’ll have a nice cushion to avoid taking on more debt than you need to.  Getting rid of post-holiday debt isn’t always easy, but it’s worthwhile for your overall financial health and state of mind. Try these tricks to get your spending back under control in the new year.

Explore Debt Relief Strategies

If you’re facing significant debt — say $10,000 or more — that’s worsened due to the holidays, it may be time to explore a more heavy-duty solution. Debt relief is one of the ways people have dug themselves out of thousands of dollars in unsecured debts. Creditors may agree to lower the amount owed for consumers in a debt relief program, provided a repayment schedule can be worked out.

You might be wondering, “Is debt relief legit?” The short answer: It can be. Making debt relief work for you depends first on finding a reputable program with a good track record of success, plus avoiding scams looking to prey on vulnerable people who owe money.

Try a Balance Transfer

Interest rates can make a big difference in how easy or difficult it is to pay back debt, and those attached to credit cards tend to be quite high on average. One possible route is transferring your balance from a card with a high annual percentage rate (APR) to one with zero interest. Of course, this magical introductory period will end at some point — but you can take advantage of zero-percent interest to pay down the principal balance in the meantime.

Start Saving for Future Holidays

Last but not least, you’ll want to make sure you avoid accumulating more debt throughout the year as the holidays approach. One way to do so is opening a savings account earmarked especially for holiday spending, then transferring a small amount of each paycheck. When the next holiday season rolls around, you’ll have a nice cushion to avoid taking on more debt than you need to.

Getting rid of post-holiday debt isn’t always easy, but it’s worthwhile for your overall financial health and state of mind. Try these tricks to get your spending back under control in the new year.