The holidays are times of great joy, but what happens after the festivities are over? You may find yourself staring at your credit card bill while wondering just what happened. Luckily, it's not hard to figure out how to pay off holiday debt. We'll walk you through some of the most effective strategies to eliminate your debt, so you can start the new year with a plan for success.
When debt is looming, it's time to budget! Nowadays, it's easier than ever to budget effectively. Of course, you can always try the tried-and-true paper and pencil method. Write out all of your monthly expenses, write out your monthly income, and look for places to cut. But, you can also try free budgeting apps to manage your money with just a click. You might find that you just need to cut luxuries like take-out or shopping trips for a few months, but you may need to make other adjustments to pay off holiday debt faster. Consider canceling some recurring monthly subscriptions to free up extra space in the budget.
The Snowball Method
Have you heard of the snowball method? This strategy was created by financial expert, Dave Ramsay, to help defeat multiple debts. First, write out all the holiday debts that you need to pay off in order from smallest to largest. This is your list of attack. Pay off your smallest debt completely, and then move onto the next one on the list. This allows you to get the manageable debts out of the way before moving onto the more intimidating sums. Combined with smart budgeting, this can be a great way to systematically pay off multiple debts.
In addition to cutting your expenses, why not expand your income? Selling unwanted items can bring in a serious chunk of change. If you've received holiday gifts that just aren't your style, sell them online and put the money toward your debt. You can also use the new year as an opportunity to rid your home of clutter. Go through old books, old toys, old appliances, and other unwanted items and try to find new homes for them. You'll enjoy a cleaner home and some extra cash!
Additionally, you can secure a side job to help generate income on the side. Many jobs, like delivery driver and food server, have flexible hours that can accommodate a wide-range of schedules. Whether running errands or securing freelance work, every hour gets you a little bit closer to being debt-free! What if you have no extra time? Consider resources like cash advances and payday loans to help you climb out of that holiday debt a little faster.
Use Your Tax Refund
Though you may have more exciting plans for that tax refund, putting that money toward your holiday debt might be the wisest thing to do. Once you get out of debt, you're free to spend your money toward more fun. So, parting ways with your tax refund may be worth the short-term disappointment in favor of your long-term happiness.