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.
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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.
Resolve $10,000 or more of your debt
Credit card debt is suffocating. It constantly weighs on your mind and controls every choice you make. You can end up emotionally and even physically drained from it. And even though you make regular payments, it feels like you can never make any progress because of the interest.
National Debt Relief could help you resolve your credit card debt with an affordable plan that works for you. Just tell them your situation, then find out your debt relief options.1
How to get National Debt Relief to help you resolve your debt: Sign up for a free debt assessment here. (Do not skip this step!) By signing up for a free assessment, National Debt Relief can assist you in settling your debt, but only if you schedule the assessment.
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.
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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!2
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.
Bottom line
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?
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