Paying Off Holiday Debt The Right Way

Once the dust has settled and you’ve taken down the Christmas tree and removed the holiday decorations, it’s time to face the unpleasant result of the season gone-by: credit card bills. As much as you want to forget how much you’ve spent for all those gifts and food that the family shared for the holidays, you need to pay off the debts you’ve incurred quickly and efficiently as possible. This way, you will be able to minimize interest rates and other charges and avoid falling into a deeper financial hole. To help you recover from the money hangover, below are some judicious steps to take.

Determine how much you owe

With numerous trips to stores during the holidays, you may have already lose track of how many times you’ve swiped your credit cards. So before the statements hit the mailbox, spend some time documenting how much you spent and where. Use purchase receipts to know the figures or go over your credit card purchases online to know how much you owe. Also document the purchases you made using store credit and payment plans.

Budget aggressively

To pay down your holiday debts fast, you need to budget aggressively. That means, you have to determine how much excess cash you have each month, which you can use to pay for your card balances. Establish a budget for the first quarter of the year and include details like the amount of cash coming from salaries, investments and other sources of income. Also, list down non-negotiable expenses like rent or mortgage, car payments, utilities and groceries. The excess money from your budget should be considered as a disposable income, most of which should be allotted to pay off your credit card debts.

Leave out unnecessary expenses

Since you’re in the process of settling those bills, reduce unnecessary spending and if possible cut down in areas that may add up to your expenses. For instance, eat in rather than dining out, cut the TV cord or drop the landline. You don’t have to make do with these things forever, though, just long enough to pay off the holiday debts.

Avoid paying only the minimum

Avoid the temptation of paying only the minimum of your credit cards, as paying only that will surely leave you in debt until the following year. If you can’t pay the full amounts, do as much as you can to reduce the interest on your remaining balances.

Plan out early for next year

Once you’ve taken care of last year’s holiday spending, learn your lessons and prep up for the upcoming holiday season so that you will start next year debt-free. Review your last year spending and make adjustments to cover differences. Then, save money each month and deposit it into a high-interest savings account. Never be tempted to touch it until it’s time to do your holiday shopping again.

This guest post was contributed by Ericka who has written numerous insightful posts related to personal finance. She is also a regular contributor for