4 Tips to Recover from Holiday Debt

Gifts are the love language of many—after all, they say a thousand words. But if you went overboard this holiday season, it’s time to rethink your next financial steps.

The word debt carries a lot of weight, and rightfully so. Debt can affect every part of a person’s life, from home ownership to marriage stability. But with intelligent planning and some expert guidance, you can pull yourself out of any financial hole.

To rebound from any holiday shopping sprees, let’s review a few tips for debt recovery:

#1: Choose a Payment Strategy

The only way to get rid of debt? Pay it off.

We know, easier said than done. However, any financial situation can handle a structured payment plan. If dealing with a single debt, use a repayment calculator to build a personal payment schedule. Make sure your timeline is reasonable and achievable with your budget.

With multiple debts, reinforce your plan by consolidating under a credit counseling agency. This method gives all debts the same fixed interest rate, meaning you’ll save money over time. As a bonus, agencies will stop you from opening more high-risk credit accounts.

#2: Gather Extra Income Sources

Think of a balance scale—if you spend a little extra, you have to earn a little extra.

Maybe you’re lucky enough to have a salary which will cover any holiday debt. For most, though, debt requires some hustle to resolve. To pick up cash, here are some supplemental income sources for debt:

• Year-end bonuses – Your habit might be spending a year-end bonus on a wish list item. But with debt to pay off, use those funds more wisely as your repayment.
• Salary funneling – For payment plan assistance, turn to your workplace. Your boss or payroll manager can siphon off a monthly salary percentage into a specified savings account. Over the following months, you’ll build a small debt payoff fund with ease.
• Tax refunds – You don’t have to wait until April. Filing your taxes early means receiving your tax refunds early. Ask the IRS to deposit any refunds into a savings account related to debt payoff.
• Return or Resell – There’s always a few holiday gifts that could use a better home. Take all unloved sweaters and toys back to the store for a refund. And if returns are impossible, try to resell via online platforms like Depop.
• Home equity – As a last resort, opening a home equity line of credit can provide debt payment funds. With low interest rates and tax write-off benefits, home equity is a safer line of credit than most. However, only choose this option if your house has established rising value, and you can guarantee payment.

#3: Curb Your Spending

After the indulgent holidays, it feels right to limit some luxuries. And with debt to pay, it’s also necessary.

It can be difficult turning down social events, dining out, and vacations. But paying off debt is the only way you’ll build financial stability for those activities. Fortunately, there are many tools for you to track and cut off excess spending:

• Budget spreadsheet templates
• Smartphone budgeting apps
• Credit card moratoriums
• Prepaid credit cards
• Paper budget planners

Find the method that fits your lifestyle, and start cutting out those weekend getaways (at least for now).

#4: Seek Out Financial Guidance

When it comes to money management, expertise matters. You can play around with watercolors or yoga, but not with your finances.

If completely lost on your debt journey, consult a financial advisor. Quality consulting services, like Cetera, can provide everything from debt payment plans to wealth planning. With their robust financial advisor network, you’ll be receiving guidance from the best of the best. 

Enter the New Year with a Debt-Free Plan

Debt can be an emotional topic, filled with fear and anxiety. But don’t panic—with these tips, you can form a solid plan to pull yourself out of any debt-hole. Put down the credit card, and pick up the spreadsheet for a debt-free new year.