7 ways to pay off your holiday debt quickly

Posted on 2017-01-09

 

December is a joyous time of the year, and we all hope to carry that cheerful spirit through to the New Year. But it can be tough to feel good when you have to pay off all your debts from the festive season.

It doesn’t need to be that way, though – check out these tips on getting rid of your holiday debt as quickly as possible.

1. Change your spending habits

This is the most fundamental way to help with your debt not only now, but in the future. You can do everything else on this list but if there isn’t a lifestyle change in the way you spend, the problem is likely happen over and over.  

2. Pay more than the minimum

What really gets you when you’re paying off debt is usually the interest. When you only pay the minimum amount on your debt, often you’re just paying off interest and not chipping away at the debt itself. The quicker you pay off your debt, the less interest you end up paying. Plus, the quicker you pay it off, the sooner you’ll be debt-free and in the clear.

3. Budget

Yup, we talk about this a lot, but it’s the key to successfully managing your finances. It’s important not to ignore the debt; facing it head on is the only way you’ll come out on top. The first step to doing this is to make a budget, and no, this doesn’t mean you have to give up all the fun – setting realistic goals when budgeting is equally as important as the budget itself. At its simplest, a budget is a way to track your finances and ring-fence them so you’re not spending too much on one expense. If you’ve never drawn up a budget before, you’ll be surprised at how much you’re spending on some things!

4. Prioritise debts

Of course, you need to do your best to pay more than the minimum on all your debts each month, but ranking them in order of what gets paid off quicker will go a long way; it’s about deciding what is going to lead you into less debt, quicker. There are a few strategies for doing this, and which is best for you depends on your circumstances.

  • Pay off the smaller debts: One theory is to pay off the smaller debts first. They’ll go quickly and once they’re gone, it’ll free up the money you were using on them to move onto the next smallest, and so on.
  • Pay the non-negotiable debts: These are the debts that have serious consequences if you don’t pay them, such as your home loan and car repayments. If you don’t pay these, you could lose your house and vehicle.
  • Pay the debt with the highest interest rate: Some debts may have a higher interest rate than others, such as personal loans, so paying those off first can help get you into a position where your monthly repayments are more manageable.

5. Sell unwanted gifts

It sounds harsh, but if you got a fancy gift that you don’t have any use for, consider selling it. If it’s unwanted, a better gift would be money that helps you come out on top financially as soon as possible.

6. Shop around

The start of the year is a time for new beginnings, even when it comes to the goods and services you use. Changing grocery stores, getting affordable household insurance or looking for vehicle insurance quotes might lead you to saving more money every month, which means paying off debt faster.

7. Save money for the future

Paying off your debts can give you the most wonderful feeling of relief, but you know what an ever better feeling is? Never getting into debt at all! By saving through the year, you can build up a safety net that will protect you when emergencies come up or important events, like the holidays and birthdays, come around.


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The information contained in this article should not be construed as financial advice and is provided for informational purposes only.

Information obtained from: https://www.creditkarma.com/article/pay-off-holiday-debt-quickly-121162; http://money.usnews.com/money/blogs/my-money/2013/12/26/8-ways-to-pay-down-holiday-debt-quickly; https://www.moneyadviceservice.org.uk/en/articles/how-to-prioritise-your-debts; http://www.fin24.com/Debt/Get-out-of-Debt/Three-steps-to-prioritise-debt-20130430