Landed in Holiday Debt? Your 5-Point Payoff Plan

A woman in a festive sweater wrapping gifts.

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Don't let holiday debt drag on. Here's how to get rid of it.

Key points

  • It's common to end the holiday season with debt.
  • The right strategy to make that debt disappear could include redoing your budget or getting a side gig.

Many people pledge not to go overboard on the holidays, only to end up in debt by the time the season is over. If that happened to you this year, don't beat yourself up.

First of all, you're no doubt in good company. But also, sales were harder to come by this year due to supply chain issues and inflation, so you may have had a harder time sticking to a budget.

If you're starting 2022 with a pile of holiday debt, you'll want to shed it as quickly as possible. The longer you carry that debt, the more interest you'll rack up, and the more it might hurt your credit score. Here are five steps to shake your holiday debt quickly and efficiently.

1. Look at the big picture

Knowing how much debt you've accumulated is your first step toward paying it off. Take a look at your various credit cards and see what your balances entail. Knowing that total will help you tackle your debt more effectively.

2. See if there's a more affordable payoff route

If you charged your holiday expenses on various credit cards, you may now be looking at some pretty high interest rates on your debt. If that's the case, lowering those interest rates will make your debt easier and more affordable to pay off.

One option to look at in this regard is a balance transfer, where you move your various balances onto a single card with a lower interest rate (or, ideally, a 0% introductory rate). Another option is to take out a personal loan, use it to pay off your debt, and then pay off that loan at what should be a lower interest rate.

3. Rework your budget

You may need to cut back on some spending in the near term to free up cash for debt payoff purposes. Take a look at your budget and see which spending categories count as non-essential. Then, look at reducing your spending in those areas until you've made a nice dent in your debt.

4. Get a side hustle

You may not have many expenses in your budget to reduce. Or perhaps you don't want to give up your streaming services, morning coffee, and weekly takeout dinner. If that's the case, getting a side hustle could make it much easier to pay off your holiday debt quickly. Since that income won't be earmarked for other bills, you can use it to chip away at your balance.

5. Get cash for holiday gifts you received but don't want

The custom-knit sweater with your name on it that your aunt made is a holiday gift you're probably stuck with. But if you received gifts you don't really want or need, selling them for cash could leave you with a decent chunk of money to pay off your debt.

If you have gift cards to stores you don't really frequent, there are sites like that allow you to exchange them for cash. And you can sell electronics, apparel, and other items online via your local social media marketplace page. Or, host a good old-fashioned yard sale.

Starting the new year off with holiday debt may not be ideal. But if that's the situation you're in, don't despair. If you commit to paying off your debt, you may be surprised at how quickly you're able to eliminate it. And once you do, you'll be in a strong position to start saving for next year's holidays so you can avoid a repeat.

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