How to Pay Down Holiday Debt as Quickly as Possible

December 26, 2013

Holiday DebtEven with the best intentions, it’s too common: People rack up debt during the holidays. If you have some holiday debt, chances are that you want to get rid of that debt as soon as possible.

Here are some tips from Kevin Gallegos, the vice president of Phoenix operations for Freedom Financial Network:

1. Stop charging.

The first thing you need to do is stop using your credit card. “Don’t close any long-standing accounts with a positive payment history, as that can hurt your credit scores,” says Gallegos. But you do need to stop charging. He suggests the time-honored tradition of freezing the credit cards so you can’t make impulse purchases with them while you pay off your holiday debt.

2. Keep paying for your needs.

“Make sure to pay for necessities like food, clothing, and shelter,” says Gallegos. “However, keep in mind that things like fine dining and a new wardrobe are not necessities.” You don’t want to put other areas of your finances at risk, so keep paying on secured debt (car, home) and student loans.

3. Start with credit card debt.

Now that you have stopped charging and identified your true needs, it’s time to make a plan for paying off that holiday debt. Gallegos suggests starting with credit card debt. “Begin by figuring out a fixed monthly amount you can pay toward your debt until all debts have been paid off,” he says. “This amount should be more than the combined minimum payments on all of your cards.”

Then, choose a method of debt pay down. There’s the debt avalanche, which focuses on starting on the card with the highest interest rate so you pay off debt at a faster rate, or the debt snowball which has you start with the lowest balance. The snowball takes longer and costs more in interest, but it can be more motivating, since you start off with a quick victory.

4. Negotiate.

Gallegos points out that you can negotiate with your creditors. “If you have experienced a temporary hardship, you might try calling creditors and asking for ‘temporary hardship status,'” he says. “Some creditors may work out payment plans.” This can be a way to get a little breathing room while you tackle your holiday debt.

Don’t forget that if you are a customer in good standing, you might also be able to negotiate your interest rate. If you can get a lower interest rate, you’ll be able to pay off your holiday debt quicker.

5. Get help if you need it.

Chances are that you can handle your holiday debt on your own. However, if you are overwhelmed and don’t know where to start, it can make sense to get a little help. “Individuals who have credit card debt of $10,000 or more, and are struggling to make required minimum payments, may find help,” says Gallegos.

Your holiday debt might have put you over the edge, acting as the last straw in your situation. If this is the case, you might need help. Make sure you work with a reputable credit counselor or debt company so that you don’t end up in worse trouble overall.

How are you planning on paying down your holiday debt? Leave a comment!


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Miranda writes about personal finance almost every day. An experienced freelance writer, she's covered your money online and in print from every angle and is always looking for new ones.

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