It is easy to get caught up in the holiday spending spirit spree and go over your budget during the festive season. If you have overspent this holiday season, you may be wondering how to quickly and easily pay off your holiday debt after the New Year quickly and easily. If you incur debt over the holiday season, the sooner you pay off that, the better for your finances.
This article will teach you the best ways to pay off your holiday debt after the New Year. By paying off that debt as soon as possible, you can focus on your other financial goals in the new year.
#1 Assess Your Overall Financial Situation
When it comes to the best ways to pay off your holiday debt after the new year, you will need to assess your overall financial situation after the holidays. You will need to know how much debt you owe, the type of each debt you have, your short and long-term financial goals, minimum monthly payment amounts, due payment dates, interest rates, and the timeframe in which you would like to get out of your holiday debt.
#2 Know Your Holiday Debt
You can figure out how much holiday debt you have by checking your credit card bills or statements online. Make a list of all your holiday debts, then add up all your debts. Make a list of the interest rate for each debt and the status of each debt. Once you know the debt you have incurred over the holiday season, the minimum payment due, and the interest rates, decide which debt to eliminate first (more on this later in another section of this article).
Apart from strategically prioritizing debt repayment, individuals facing multiple debts after the holiday season might consider debt consolidation as a viable solution. Consolidating debts into a single loan, such as through an institution like Upgrade or LendingClub, can streamline payments and alleviate the stress of juggling multiple debts. To make an informed decision, for instance, exploring reviews on Upgrade loan services is beneficial because these reviews often provide insights into the application process, interest rates, repayment terms, and customer experiences, enabling individuals to choose a reliable and suitable institution for debt consolidation. Researching the market and reading reviews can help individuals understand the intricacies of debt consolidation before making an informed decision.
#3 Create a Monthly Budget
You must determine how much money you can afford toward debt repayments. That is where a budget comes in. A household budget will show you how much money you have, if any, after your monthly expenditure, including the debt expenses (e.g., the minimum monthly payment of each debt you have).
If you do not have any money left at the end of the month, you will need to cut spending to save as much money as possible to pay off your holiday debt. Another option is to increase your income to pay off your debt faster with that extra money.
If you need a budget, it is crucial to make one. You can do it by using Microsoft Excel, Word, or even just a sheet of paper. The first step is to list all of your weekly and monthly income sources and then calculate the total income. Then list all of your monthly expenses and calculate the total outgoings. Next, subtract your monthly expenses from your monthly income.
Living within your means will help you to save some money that can be put toward paying off your holiday debt faster. If you find out that you spend more money than you earn, then you will need to cut back on some expenses or cut out some expenses temporarily, so your expenses are equal to your income.
However, you have a surplus budget if you spend less than what you earn every month. You can use the surplus money to pay off your holiday debt quickly. You can still look for ways to make more savings. The extra savings can help you pay off your holiday debt.
A budget will show you if you need to cut spending to make savings or increase your income to find that extra money you can put toward your holiday debt repayments.
#4 Cut Spending
If your monthly expenses exceed your income, look to see what you can eliminate from your expense category. Take a look at expenses you can cut out entirely temporarily to save money that you can put toward holiday debt elimination. Identify expenses you can cut out entirely or cut back on for a few months to save money for debt repayments.
Find creative ways to save money on household bills and grocery/food shopping. You can make coffee at home instead of buying that latte every morning to save money. Can you pack lunch for work? Eating a packed lunch alone will save you a lot of money every month. Plus, you can stay healthier by eating homemade food. Cut back on the number of times you eat takeout/restaurant foods.
You can downgrade or even cancel the monthly subscriptions that you rarely use, like gym memberships, magazine subscriptions, etc. If you do not watch TV much anyway, you can downgrade your cable package or cut it entirely and go for a less pricey on-demand online content streaming service.
If you have multiple content streaming services, keep just one you need. Downgrade your phone contact/s and internet package.
You can save money every week if you watch the movie at home instead of going to the theatre. You can save a ton of money by quitting your vices if you drink or smoke. It is perfect for your health too.
If you cannot cut out some of your expenses, find out what to cut back on to save some money. You can downgrade your TV package, cut your phone and Internet bills, and reduce food shopping bills.
In short, cut any non-essential expenses to free up cash in your budget to work for you in paying off your holiday debt faster after the new year.
#5 Make a Debt Payment Plan
Choose what debt to pay off first if you have racked up holiday debt on multiple credit cards or/and accumulated any other type of debt during the holiday season. When paying off credit card debt on multiple credit cards, there are two ways to knock it down.
One way to do it is to focus on the credit card debt with the highest interest rate first by paying more than the minimum payment toward it while paying the minimum monthly amount on the other credit card/s. Once that is paid off, you take the money you were paying on that debt and put it toward the next highest interest rate debt until you pay off the lowest interest rate credit card debt. This method is called the debt avalanche method, saving you the most money on interest payments.
Another way to pay off credit card debt fast is to make more than the minimum payment on the debt with the lowest balance first while making the minimum payment on the rest. Once that is paid off, you attack the next lowest debt until you knock down the most significant debt. This debt repayment method is known as the debt snowball method.
If you have borrowed on multiple credit cards or personal loans, it is best to pay off the debt with the highest interest rate first to save more money on interest because that is costing you the most, and work your way down.
#6 Lower Your Interest Rate on Credit Card/s
One of the best ways to pay off your holiday debt faster is to negotiate for a lower rate on your credit card/s. If you consistently pay your credit card bills on time, you can get a lower rate on your credit card/s. Contact each of your credit card issuers to see if they can reduce your current interest rate.
Generally, you will need to have a good credit score to convince them to reduce your rate. However, if you have a good payment history, they may lower your current interest rate.
You can save money on interest payments if you can get a lower interest rate on a credit card. Use that money to increase your debt repayments and get out of debt faster.
#7 Transfer Your Credit Card Debt to a 0% Promotional or Low-Interest Card
If you are paying a high-interest rate on your credit card/s, one of the best ways to pay off your holiday debt after the new year is to transfer your balances onto a card that offers a 0% introductory rate or a low rate for balance transfers. Some credit cards offer a 0% interest rate on balance transfers for 18 months or more.
If you get a 0% balance transfer credit card, transfer the balances from your high-interest credit cards onto the new card. Use the savings you will be making on interest payments to make extra payments toward this new debt to pay off your holiday debt quickly.
#8 Stop Using Your Credit Card(s) for a While
If you are trying to pay off your holiday debt quickly, stop using your credit card/s until you get rid of your debt. If you are already in debt, do not rely on credit card/s for purchases because it is easy to overspend when you rely on credit for purchases, even if you have the cash to pay off your credit card bills in full on time.
You could use that money you spent on unnecessary purchases using your credit cards to put toward your holiday debt and pay off it faster. So, stop using your credit card/s for a while.
#9 Make More Money
If you cannot save much by cutting your spending toward your holiday debt, look for ways to increase your income. Today, there are many different ways to earn extra money thanks to the internet.
Depending on your skills and interests, you can work as a:
- freelancer writer
- ghost blogger
- virtual assistant
- graphic designer
- web designer
- social media marketer/manager
- online tutor
- online English teacher
- data entry worker
- printable seller – Take my course, Printables Ecom Academy here!
- blogger – Take my course, Printables Blog Academy here!
You can start your own online business to make extra money or even a full-time income, depending on the work and time you put into it. If you have a knack for selling, you can quickly sell your unwanted items to make some money to put toward holiday debt repayment.
You can also buy in-demand products at low prices to sell them on various sites at higher prices to make a profit. Depending on your creative skills, you can also sell digital products like printables, online courses, eBooks, artwork, designs, and more to people worldwide to make extra money.
If you are interested in a freelance role like a freelance writer or social media manager, freelance sites like Upwork or Fiverr can be great places to find relevant freelance jobs online. There are also job-specific sites to find suitable jobs online.
If you are looking for online jobs that do not require special skills, you can try online surveys, data entry, and website testing jobs to make extra money. You can fill in online surveys to earn some extra cash. Many reputable survey sites will pay you cash to complete surveys online.
Sign up with some high-paying survey sites like:
You can also make money using your smartphone thanks to various apps that will pay you to do multiple tasks online at home or on the go. Traditional part-time jobs are another option for making extra money. Getting a pay raise and working overtime at your current job are other sources of additional income. Put that money toward holiday debt repayment if you are making extra income.
#10 Use Unexpected Income to Pay off Holiday Debt
If you come into unexpected income like a tax return, an annual bonus from your employer, or other unexpected payment, save money on it; instead, use it to pay off your holiday debt sooner. Depending on your holiday debt and unexpected income, you could pay off that debt.
More Ways to Pay Off Your Holiday Debt After the New Year?
You could use a few or all of the above tips to get out of your holiday debt after the new year. If you find yourself getting into debt this holiday season, these are some of the best ways to get off your holiday debt after the new year.
Once you have paid off debt, start setting aside money every month for the next festive season so you can enjoy a debt-free holiday next year.
Do you have more ways to pay off holiday debt? Let us know in the comments.
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