As those credit card statements start to roll in and you take a look at your finances for the year ahead, consider putting together a plan to pay off holiday debt as quickly as possible. That debt hangover won't linger when you make your debt payoff plan a high priority and are more disciplined with your spending over the next few months.
Here are eight ways to pay down holiday debt:
1. Make a list. Create a master list of all holiday-related expenditures that were paid for with a credit card or a personal loan this year. If you can't pay off everything at once, separate the list by credit card and prioritize it based on interest rates. Plan on paying off the high-interest balances first so that you can save money on interest over the next few months. Knowing what your total holiday debt load is will make it much easier to create a realistic payoff plan.
2. Take a break from credit card spending. As you start to pay down that holiday debt, stop using credit cards on a regular basis. Even if you earn cash back or other rewards with credit card purchases, stop spending with your credit cards until you have your finances under control. Leave the cards at home when you're out shopping so you aren't tempted to use them.
3. Use your holiday bonus. If you received any type of holiday or New Year's bonus, put that money toward your debt payoff plan. Avoid the temptation to spend that bonus on a vacation or other luxury purchase at the onset of the new year so you can work on improving your financial situation instead.
4. Sell unwanted gift cards. You can sell unwanted and unused gift cards for cash at an online marketplace, and use that money to pay off holiday debt. Make sure to read the fine print on each site so you understand how much you will get back after any transaction or selling fees.
5. Sell unwanted gifts or personal items. Take inventory of personal items and any extra or unwanted gifts you might be able to sell on eBay or Craigslist. Do some research to make sure you list these items at a fair and reasonable price. Take quality photos and write an attention-grabbing headline and description to sell the item as quickly as possible. Use cash from those sales to pay down your holiday debt.
6. Save money by transferring balances. If you are eligible for any 0 percent interest credit card offers, consider transferring your holiday debt over to a new card and paying it off as quickly as possible. Make sure you understand how much you will end up paying in balance transfer fees.
7. Make a weekly payment. Don't wait until you receive your statement to make only the minimum payment. Make your debt payoff plan a high priority, and strengthen your commitment to pay everything off by making weekly, instead of monthly, payments. Weekly payments will help you get back on a positive financial track sooner.
8. Change your spending habits for a few months. Be prepared to make some changes to your budget so that you can scale back on monthly expenses and free up some cash to pay off holiday debt. Cancel subscriptions or memberships you no longer use, tighten up the grocery budget and find ways to cut other household expenses. Keep track of how much you are saving each week or month. Tally up that amount, and keep a log of how much your debt load decreases each week to stay on track with your plan.
Using these basic steps as your guide, you'll pay off your holiday debt in no time.
Sabah Karimi is a contributor to the personal finance blog Wise Bread. Visit Wise Bread to find 0 percent balance transfer credit cardsto pay off holiday debt.