The holiday season often brings joy, laughter, and an abundance of festivities. However, for many, it also leaves a lingering aftermath in the form of holiday debt.
If you find yourself facing the daunting task of paying down post-holiday expenses, fear not. We compiled actionable tips to help you swiftly tackle and eliminate that holiday debt.
From smart money moves to practical lifestyle changes, each is designed to provide you with a roadmap to financial recovery.
Eliminate your late tax debt
Each year, the IRS forgives millions in unpaid taxes. If you have more than $10,000 in tax debt, or have 3+ years of unfiled taxes, you could get forgiveness too. You might be eligible to lower the amount you owe, or eliminate your tax debt completely.
Easy Tax Relief could help you lower or get out of your tax debt for good. They’re well respected in the industry and have been recognized for their ethical standards when dealing with tax debt. While most tax companies just put you on a payment plan and file your taxes for you, Easy Tax Relief talks to the IRS directly. They can help you pay off your tax debt faster while potentially reducing what you owe.
Important: Not everyone will qualify. To take advantage of this special program you must owe more than $10,000 in past-due taxes.
Use a balance transfer credit card
Consolidating your holiday debt onto a balance transfer credit card with a 0% APR for an introductory period can help you save money on interest and pay off the principal faster.
Be mindful of transfer fees and ensure you have a clear plan to pay off the transferred balance within the introductory period.
Start a side hustle for extra cash
Starting a side hustle is a great way to pay off your holiday debt. Whether it's freelancing, consulting, or offering a skill or service you excel in, a side hustle can provide an additional stream of income.
Channel the earnings from your side hustle exclusively toward debt repayment to accelerate your progress. Use this opportunity to generate extra cash and explore your passions and skills that may have income-generating potential.
Prioritize debt reduction by interest rate
Not all debts are created equal, especially when it comes to interest rates. Prioritize your debt reduction efforts by focusing on the debts with the highest interest rates first.
By paying off high-interest debts more aggressively, you save money in the long run and accelerate your overall debt payoff.
Create a list of your debts, organize them by interest rates, and allocate extra funds toward the debts with the highest rates.
If you’re over 50, take advantage of massive discounts and financial resources
Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.
How to become a member today:
- Go here, select your free gift, and click “Join Today”
- Create your account (important!) by answering a few simple questions
- Start enjoying your discounts and perks!
Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $12 per year with auto-renewal.
Pay more than the minimum payment
While making the minimum payment on your debts keeps you in good standing, it does little to expedite your debt payoff. Commit to paying more than the minimum on each debt, especially on those with higher interest rates.
Even a modest increase in your monthly payment can have a significant impact over time, reducing the total interest paid and shortening the repayment period.
Cut back on non-essential expenses
Identify non-essential expenses in your budget and cut back on them to free up more funds for debt repayment. This could include dining out less frequently, postponing discretionary purchases, or reassessing subscription services.
Temporary sacrifices in non-essential areas can lead to substantial savings, providing you with the financial resources to pay down your holiday debt faster.
Negotiate lower interest rates
Take the initiative to negotiate lower interest rates with your creditors. A simple phone call expressing your commitment to debt repayment may lead to reduced interest rates, especially if you have a good payment history.
Lower interest rates mean more of your payments go toward the principal balance, accelerating your journey to debt freedom. Be persistent and explore this option with each of your creditors to maximize potential savings.
Use windfalls and unexpected income
Put unexpected windfalls or income to good use by directing them toward your holiday debt. Consider allocating these unexpected funds toward debt repayment, whether it's a tax refund, a work bonus, or a financial gift.
Using windfalls to make lump-sum payments can significantly reduce your overall debt burden and fast-track your progress.
While it may be tempting to indulge in treats with unexpected income, prioritize your financial well-being by chipping away at your holiday debt instead.
Consolidate high-interest debts
Explore debt consolidation options to simplify your repayment strategy and reduce interest rates. Consolidating high-interest debts, such as credit card balances, into a single loan with a lower interest rate can streamline your payments and save you money.
Research different consolidation options, including personal loans or debt consolidation programs, and choose the option that best fits your financial situation and goals.
Sell unused or unnecessary items
Generate additional funds for debt repayment by decluttering your living space and selling unused or unnecessary items. From clothing and electronics to furniture and collectibles, there's likely value in items you no longer need.
Utilize online marketplaces, garage sales, or consignment shops to turn clutter into cash. The proceeds can be directed toward paying down your holiday debt, providing immediate relief and tangible progress.
Earn cash back on everyday purchases with this rare account
Want to earn cash back on your everyday purchases without using a credit card? With the Discover®️ Cashback Debit Checking account (member FDIC), you can earn 1% cash back on up to $3,000 in debit card purchases each month!1
With no credit check to apply and no monthly fees to worry about, you can earn nearly passive income on purchases you’re making anyway — up to an extra $360 a year!
This rare checking account has other great perks too, like access to your paycheck up to 2 days early with Early Pay, no minimum deposit or monthly balance requirements, over 60K fee-free ATMs, and the ability to add cash to your account at Walmart stores nationwide.
Don’t leave money on the table — it only takes minutes to apply and it won’t impact your credit score.
Temporarily pause contributions to retirement accounts
Consider temporarily pausing contributions to retirement accounts to redirect more funds toward your holiday debt.
While contributing to retirement accounts is essential for long-term financial health, a temporary pause can provide a short-term boost to your debt repayment efforts.
Consult with a financial advisor to assess the impact on your overall financial plan and ensure a balanced approach between debt reduction and long-term savings.
Seek professional financial advice
If your holiday debt feels overwhelming, seek professional financial advice. Certified financial planners or credit counselors can assess your unique financial situation and provide personalized strategies for effective debt management.
Professional advice offers clarity on your financial landscape and equips you with the tools to make informed decisions on your journey to debt-free living.
Explore debt settlement options... carefully
Debt settlement involves negotiating with creditors to settle your debts for less than the total amount owed. While this can result in a significant debt reduction, it has potential drawbacks, including negative impacts on your credit score and tax implications.
Explore debt settlement options cautiously, considering the associated risks and seeking legal or financial advice before proceeding. This strategy is best suited for individuals facing extreme financial hardship and should be carefully considered.
Establish an emergency fund
Building an emergency fund is crucial, even as you focus on paying down holiday debt. An emergency fund acts as a financial safety net, providing funds for unexpected expenses and preventing reliance on credit cards in times of crisis.
Allocate a portion of your budget to gradually build an emergency fund. Having this reserve can help prevent the accumulation of new debt during unforeseen circumstances and enhance your overall financial stability.
Consider keeping your emergency funds in a high-yield savings account to build up your savings faster.
As you navigate the path to paying down your holiday debt, remember that each step helps you get out of debt and build wealth for the future.
Consider which tips align best with your situation, implement them with determination, and watch your holiday debt diminish.
What steps will you take today to pave the way for a debt-free tomorrow?