9 Ways to Manage Your Holiday Debt This Year

The coronavirus pandemic will no doubt change the way people celebrate the holidays this year. Travel plans will be canceled. Parties will be pared down. And gift-giving may not be as robust as it usually is. Still, many people will inevitably close out the 2020 holiday season with debt. If you're one of them, here's how to tackle it.

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The less debt you accrue, the more manageable it will be. If you're already in debt, stop spending now. It's that simple. Explain to loved ones that you've maxed out your gift-giving budget, and that you can't swing a last-minute flight home. With any luck, they'll understand that your financial stability is more important than an extra scarf or sweater, and while they might miss seeing you in person, that may be the safer bet anyway due to the pandemic.

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Spending less on living expenses will free up cash to pay off your debt. While you clearly can't stop paying rent, you can stop ordering meals in or splurging on expensive groceries. You can also temporarily pause subscription boxes and other expenses that are more of a luxury than a necessity.

Taking inventory at home and selling things you no longer use is a good way to drum up cash to tackle a newly incurred pile of debt. You may find that your old electronics or handbags bring in enough money to pay off a small balance on one of your credit cards.

Chances are you won't love every gift you get this holiday season. There's nothing wrong with selling those items for cash -- discreetly, of course, so as not to offend the folks who gave them to you.

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If you have a holiday bonus coming your way at work, you can use that cash to pay off a chunk of your debt (or maybe even all of it, if it's generous enough). That said, your bonus will be subject to taxes, so if you have $1,000 coming your way, that won't necessarily mean you'll get to lower your credit card balance by $1,000.

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If you're getting a raise for 2021, you have a prime opportunity to get out of debt fairly quickly. All you need to do is apply that entire boost to your outstanding balances. Since it's money you never had before, you should be able to continue living on your current paycheck and use your extra cash to knock your debt out.

If you owe money on more than one credit card, it pays to tackle the one with the highest interest rate first. You may be inclined to pay down your smallest balance first, but going in order of interest rate makes more sense, financially speaking.

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Transferring various credit card balances onto a single card with a lower interest rate could make paying off that debt a lot less expensive. This especially holds true if you snag a balance transfer offer with a 0% introductory rate.

If you have great credit, you may be eligible for a low interest rate personal loan. That way, you can use the proceeds to pay off your credit cards, at which point you’ll be left with a less expensive loan to tackle.

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The sooner you get rid of your holiday debt, the less it'll cost you or hurt you financially in the new year. And once that debt is gone, aim to start socking money away for the upcoming holiday season so you don't wind up in the same scenario in a year's time.

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