It’s the most wonderful time of the year—at least until your credit card statement arrives. After the festivities end and all the presents have been exchanged, many people find themselves struggling with remaining debt that sticks around long after the holiday season.

According to NerdWallet’s 2019 Holiday Shopping Report, nearly 3 in 5 holiday shoppers (59%) incurred credit card debt during the 2018 shopping season, and 35% of them (approximately 48 million Americans) are still working to pay it off. If it seems like you’ll need a snow plow to dig yourself out of debt, you’ve come to the right place. 

By following our 3-step process below, you can kiss the ghost of Christmas debt goodbye and embrace the new year feeling financially confident.

Step One: Assess the Situation

While it’s tempting to shove your bills in a drawer and forget about them, the first step in taking control of your holiday debt is to know exactly how much you owe. Make sure to include interest rates into this equation, as they will also factor into your final sum. After you have your master list, you’ll want to rank your debts from highest to lowest priority, starting with your highest-interest balance. 

This is also a great time to look at and rebalance your budget. The key is to look for any extraneous spending you can temporarily cut. For example, instead of grabbing a coffee at Starbucks every morning, you can invest in a travel mug and brew your own at home. It’s also crucial that you take into account any required monthly payments you have — i.e., mortgage, car payments, student loans, etc. Endangering or delaying those critical payments will only set yourself up for an even more difficult time managing debt in the long run.

Step Two: Identify Quick Money Wins

Find Alternative Ways to Make Money

A great way to earn some additional income to apply to your debt is to find a side gig that works with your schedule. Consider applying for part-time employment through gig-based apps—driving for Uber or Lyft, shopping for Instacart, or even walking dogs for Wag or Rover. If working from home suits you better, look for a part-time role as a remote customer service agent, transcriptionist, or data entry specialist. You can also use your skillset to offer consulting services or perform odd jobs. Don’t count out your current employer either—try asking if your workplace is offering any additional projects or overtime hours. By giving up some free time now, you’ll be able to chip away at your debt much faster.

Sell Unused Gift Cards and Unwanted Gifts

Let’s face it—we’ve all received an ugly sweater or a random gift card to a store we’ve never heard of before. Luckily, what once was doomed to collect dust in your closet is now an opportunity to make money! Many websites and apps like eBay, Craigslist, Letgo, OfferUp, Varage Sale and Next Door, and Poshmark allow you to safely and securely sell unwanted gifts and gift cards for some quick cash.

Return “To Me, From Me” Gifts

Did you unconsciously follow the “one for them, one for me” mindset when holiday shopping? If so, you should consider returning any unplanned-for “to me, from me” gifts. Truly consider whether each item was a need or a want. By returning these impulse buys, you’ll be able to put even more money towards paying off your debt faster. Keep in mind that, once you pay off your debt, you can always budget for and repurchase those items again in the future.

Step Three: Plan Your Long-Term Strategies

Depending on your budget and other financial obligations, straightforward debt strategies may not work for you. If you feel like your debt is spiraling out of control, there are other options to help you more affordably manage them.

Personal Loan

If you’re juggling multiple balances with high interest rates, you may want to consider paying them off with a lower-rate personal loan. Personal loans can help by consolidating debt and reducing the number of payments you owe each month—making managing your debt much simpler. This solution also saves you money in the long run, as personal loan interest rates are typically lower than other interest rates.

Debt Settlement

Debt settlement is another strategy to consider if you have large amounts of debt, especially if you added holiday debt on top of other existing debt. This approach works best for those with $10,000 or more of debt owed who are struggling to make minimum payments. During the debt settlement process, you or a debt relief company working on your behalf negotiates with your creditors (i.e., a collections agency or a credit card company) to agree on a partial payment that will satisfy your debt. By settling your debt, you may end up paying 50% or less of the original balance. 

While this sounds like a simple process, this approach is not a quick fix to reduce debt. Initially, you have to stop making payments to your creditors to prove financial hardship, which has an initial negative impact on your credit score. A drop in your credit score is a temporary setback that will improve over time as each account is settled, and you continue good credit behavior.

While debt may seem harder to handle than driving a car in a blizzard, there are several ways to conquer it. We hope these tips leave you feeling merry, bright, and ready to tackle your debt!

Interested in a personal loan to pay off holiday debt? We offer loans up to $40,000 to consolidate your debt into one affordable monthly payment. Apply online to check offers in minutes with no effect to credit score.