Practical Tips for Tackling Holiday Debt | CCCS of Rochester
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Practical Tips for Tackling Holiday Debt

 

Even with the best of intentions, it can be hard to avoid holiday debt. According to a recent Lending Tree survey, 36% of people in the U.S. took on holiday debt this season, with 89% using credit cards or store cards to make purchases. With interest rates currently at 20.30%, paying down debt can seem like a never-ending cycle. 

Starting the new year in debt is never ideal, but by following these tips, you can get on track to pay it down. 

 

1. Approach your debt head-on

To get started, you’ll want to look at your overall financial picture to understand your debt. By knowing how much you owe (including interest), you can make a more effective plan. 

 

2. Make a budget

Any good plan to tackle debt should start with a budget. Knowing where your dollars go each month allows you to set aside money to pay off debt. Choose a budgeting system that works for you. One recommendation is the 50/30/20 rule, which proposes putting 50% of your monthly income toward household expenses, 30% towards wants (like eating out, travel, and entertainment), and 20% towards savings and paying down debt. An easy way to track your budget is through a budgeting app like Goodbudget, PocketGuard, or Honeydue. 

 

3. Try the debt avalanche

A debt avalanche is a method of repayment that prioritizes the credit card with the highest interest rate. It works by paying the minimum balance on all your cards and putting the leftover amount toward the card with the highest interest rate until it’s paid off. You then repeat the cycle with the next high-interest-rate card. 

 

4. Raise your monthly income

When making your budget, it’s important to cut expenses. But sometimes, that might not be enough. Try finding additional work or a freelance project to help pay down your debt quicker. Financial holiday gifts may also help boost your repayment for a few months. 

 

5. Talk to a credit counselor

Sometimes, asking for help is the best course of action. Through a credit counseling agency, you can meet with a certified credit counselor who can help you create a budget and plan for the future. They can also enroll you in a debt management plan, which allows them to work with your credit card company to reduce your interest rate and consolidate your debt into one affordable payment.  

 

As you pay down your debt, remember that it takes time. But with persistence, you will get to that finish line.

 

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