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.
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.
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.
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.
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?
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.
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.
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.
4 Take out a consolidation loan to simplify your debt repayment
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.
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.
Search online to find out the best part-time work that you can manage along with your full-time job.
7 Try not to accumulate further debt now
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.
If you undergo the utmost financial problem and you don't have any solution, then bankruptcy is recommended.
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.