Digging out after the holidays: get rid of that holiday debt

The holidays this year were nothing if not epic.

The gingerbread houses. The holiday-scented candles. The mountain of presents under the tree! New stockings and enormous feasts and baking hundreds of cookies from scratch. Not to mention the teacher gifts and neighbor deliveries and fancy cheese just because. Oh, and the wine.

All those holiday cheer options have a cost. As in, an actual mega-hit to your wallet cost.

If the holidays were amazing but expensive this year, you could be looking at some digging out financially for the first few weeks (or months) of 2023. But how do you get through that? We’re here to give you some options.

Get Out of Holiday Debt

Any of these options will help – so pick the ones you can follow through on and make a plan!

  1. Have a no spend month. Aside from essentials such as gas and groceries, don’t make any “wants” purchases. Put clothing, gifts, and eating out on hold. This will help your margin grow to help pay off that debt.
  2. Go through your credit card statements or receipts and tally up what you spent in November and December just on the holidays. Make a goal to pay off that dollar amount by April 15 – before taxes are due!
  3. If you feel like you let the credit card swiping get the best of you, try switching payment methods – stick with a debit card or cash to keep you on task.
  4. As you’re tackling spending debt payoff, go with the highest interest rate first – if it’s multiple credit cards, pick the highest interest rate one, and sock as much cash toward that monthly payment as you can. Then move on to the next highest payment.
  5. If the highest interest rate is also the highest amount and it seems insurmountable, consider using the snowball method: pay off the smallest amount first, and get some momentum going.
  6. If you would like to make large purchases (book that vacation or buy that new couch you’ve had your eye on), put it off until you’ve paid off the holiday debt.

Plan for Next Year

Since the pain of your holiday spending is still fresh, now’s the time to plan for how to handle next year’s holiday expenses so you’re not in the same boat. Here are some tips:

  1. Consider banking your holiday bonus to use next year. The whole thing.
  2. Plan ahead for holiday shopping next year – shop sales all year long. Buy a couple of gifts every month over a big sale.
  3. Set in place a plan for each event or person you buy for. If you know your limit is $50, then stick to it when it’s time to make the purchases.
  4. Add up about how much you spend on gifts, decorations, extra food, and other things during the holiday season, and make a budget to save up for it. It could be $100 each month, and by December you’d have the cash stashed away and ready to use.
  5. Consider automatic savings. Kind of like your 401(k) deferral – you won’t even see it, but it’ll be waiting in the wings when you need it. Use our Christmas Club account, which you can deposit into as a payroll deduction.

No matter what option you choose, take a good, hard look at your spending habits during the holidays, and make a plan to recover from it. Then, put in motion a new approach for next year. You’ll be able to sit back come early January with a glass of wine and zero stress about holiday dollars spent. Cheers to that!

If you have any trouble balancing your finances and debt, AmeriChoice FCU can help. You can speak to an expert about your goals and we’ll help you reach them!