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7 Ways to get out of the holiday debt hangover

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By: Barbara Delinsky
on 1st Feb,2018

Did you follow a holiday budget? If no, then you may be in debt trouble now. Well, if so, you shouldn't ignore your holiday debt. Pay off the debt as soon as possible. Check out 7 ways to get out of holiday debt.
7 Ways to get out of the holiday debt hangover

Holiday fun is over; now people are struggling with their holiday debt.

As per the report of MagnifyMoney's annual post-holiday debt survey, people in our nation have gathered an average of $1,054 debt during the holiday season, which is 5% more than the last year.

Well, it is true that during the holiday time, it is difficult to stay within your budget, but that doesn’t mean you can use your credit cards without thinking about your affordability.

Once you splurge with your credit cards and avoid making the payments, you will fall into costly credit card debt.

Why are people falling into holiday debt?

Most of the people didn't budget their holiday expenses. Thus, they were unable to stay within their means during the holiday time.

A recent survey revealed that 65.2% of consumers, who are in holiday debt, didn't create their holiday budget.

The last minute planning, gifting, and splurging, are very common during the holidays.

People who didn't plan for those last minute expenses are in debt trouble.

The after effects of spending recklessly during the holiday

The post-holiday debt survey has revealed that people are already aware of their holiday debt.

  • 46% of respondents said that they are planning to pay off their holiday debt within a month.
  • 16% of people agreed that they need more time (3 months) to get out of their debt.
  • Some people said that they need at least first half of the year to pay off their holiday debt.
  • Almost 12% people said that they are able to make only the minimum payments on their holiday debt.

Making the minimum payment is not enough; it will extend your repayment for years, which can affect your overall financial health.

Since the beginning of the year is the perfect time when you have to prepare for the tax season, you should try to pay off your holiday debt as soon as possible. Otherwise, you will feel overburdened.

If you ignore your holiday debt, it will welcome more financial trouble in the near future.

Why should you pay off your holiday debt completely?

Remember, debt is debt. If you think that the debt amount is small and you can make only minimum payments on it, then you are wrong. Because a small debt even can bloom with time.

If the interest rate is high, then you are actually losing money. So, you have to pay it off aggressively.

How can you get rid of your holiday debts completely?

1 Formulate a budget as soon as you can

If you are one of them who didn't follow a budget, then it is the right time to plan a budget. Because a budget not only helps to track your money, but also helps to pay off your debt. How does it help?

When you plan the budget, you need to put all the bills including the debt payments under the basic expense category.

If you notice that your income is not sufficient for it, then you have to reduce extra expenses or you have to boost your income.

Setting a budget can help you make debt payments and other bill payments simultaneously.

2 Earn more and make larger payments toward holiday debt

As I said earlier, making minimum payments is not enough; it will extend your debt payments and you will lose more money.

Making larger payments toward the debt is an effective way to pay off your debt.

However, to do so, you have to save more money. You need to earn more as well. How can you do it?

Here you go:

  • Stop eating outs to save money on the fancy dinner.
  • Sell the unused gift cards that you receive as holiday gifts.
  • If you receive any cash gift, don't spend. Save it instead.
  • Stop using your credit cards for the time being .

3 Consider DIY debt relief methods instead of professional debt relief services

Trust me, you can pay off your holiday debt on your own. It can help you to save money as well.

You just need to learn the DIY debt relief methods that suit you the best.

Some DIY debt relief methods work best like debt snowball method, debt avalanche method, balance transfer method, etc.

4 Take out a consolidation loan to simplify your debt repayment

If you don't have time to learn about new debt repayment methods, then you can take out a consolidation to loan to merge your multiple credit card debts.

Pay off your debts with that loan and start making payments on your new loan. Make sure you don't miss the monthly payments on your new loan.

5 To pay off the holiday debt faster, follow the debt avalanche method

Following the debt avalanche method can help you to pay off your debts faster. In this method, you need to make larger payments toward the highest interest rate debt while making minimum payments to the rest of the debts.

After paying off the highest interest rate debt, you need to target the second highest interest rate debt and apply the same method.

By doing so, you can pay off the most expensive debt easily. However, though it will take some time to pay off the highest interest rate debt, yet you can save on the interest payments in the long run.

However, to follow the avalanche method, you may have to increase your income.

6 Consider a side hustle

Accumulating debt is easier but paying it off is difficult. You have to increase your net worth to get out of holiday debt easily.

I would like to suggest you consider a side hustle to boost your income.

Search online to find out the best part-time work that you can manage along with your full-time job.

It can be anything like pet sitting, babysitting, renting the car, placing an ad in your car, freelance writing projects, online surveys, etc.

7 Try not to accumulate further debt now

When you are trying to pay off your holiday debt, try not to accumulate new debt.

You should try to pay your usual bills on time. It will help you to focus on your current debt.

Lastly, some people prefer to file bankruptcy to pay off their debts, which is a severe financial mistake.

Remember, bankruptcy is the last resort to manage your financial trouble.

If you undergo the utmost financial problem and you don't have any solution, then bankruptcy is recommended.

You shouldn't file bankruptcy to pay off your holiday debt as it can affect your credit score severely.

I have described every possible method to help you to pay off your holiday debt. Apply and let me know your experience in the comment box below.

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