Pay Off Holiday Debt Using These 4 Money Moves

According to Adobe Analytics, online holiday spending reached $257.8 billion between November 1 and December 31, an increase of 6.8% year over year. When spending rises during the holidays, debt often follows into January.  

Unfortunately, for many of us, holiday spending leads to holiday debt. The good news is that there are clear, manageable ways to regain control, reduce financial pressure, and move forward with confidence. 

Holiday debt blues

Holiday debt can feel different from other financial challenges. Bills arrive all at once, balances are often higher than expected, and interest may begin adding up quickly. On top of that, the emotional shift after the holidays can make money stress feel heavier. Many people experience:

• Anxiety about upcoming due dates.
• Regret over purchases that felt necessary at the time.
• Avoidance when it comes to checking balances or opening statements.

Holiday debt doesn’t reflect poor planning or a lack of discipline. It reflects a season that encourages spending. What matters most is having a plan that helps you move forward. 

How to pay off your holiday debt this year 

Paying off holiday debt doesn’t require perfection or extreme sacrifices. It starts with a few practical steps that bring structure to your finances. 

Review your current debts

Without a clear picture, it’s difficult to decide what to tackle first or how much room you have in your budget. It’s important to take time to list:

• Every balance from every credit card you have
• Interest rates (these can change frequently)
• Minimum payments
• Due dates for payments

You might want to make a spreadsheet, use a budgeting app, or even write everything out on paper. The method doesn’t matter as long as it makes sense to you. The goal is clarity, which is how you gain control. 

Create and stick to a budget 

A budget is a spending plan that considers your income and expenses and can help ensure your money goes where you need it to go. It isn’t about cutting everything enjoyable or saying no to every want. Creating a budget can help you get organized and will give you an overall visual of your finances.  

To account for your holiday debt, you’ll need to add debt payments to your budget. Treat these payments like your other bills that must be paid each month.  

Start by outlining:

• Fixed expenses like rent, utilities, and insurance
• Minimum debt payments
• Variable expenses such as groceries and transportation
• Extra debt payments

Some common budget types you can try include:

• 50/30/20 budget: This method divides income into needs, wants, and savings or debt repayment.  
• Zero-based budget: The rule is that subtracting your expenses from your income needs to equal zero. Every dollar is assigned a purpose, including debt payments.  
• Envelope budget: Spending limits are set for specific categories. This method can help control variable expenses like groceries or dining out.

➢RELATED: How to Create a Budget with Biweekly Paychecks 

Choose a debt payment strategy

A debt payment strategy helps you decide which balances to focus on first and how to make steady progress over time. Two common debt payment strategies you can use to pay off your holiday debt are the debt snowball and debt avalanche methods.  

Another option is debt consolidation, which combines multiple balances into a single payment. Consolidation can simplify paying off holiday debt by reducing the number of due dates and making monthly payments easier to track. Depending on the terms, it may also lower overall interest costs.  

A balance transfer card can also be helpful, as it moves multiple credit card balances to a single card with a lower or promotional interest rate for a limited time. The interest rate typically starts at a promotional 0%, then the card’s standard interest rate will kick in. 

Look for additional income streams

Adding to your income can be a great way to pay off debt, as you won’t need to worry about loan payments or paying someone back. Selling items you no longer need, asking for overtime at work, and even pausing unnecessary subscriptions can help increase your income.  

Side gig work is one of the best ways to earn extra income, with many of them allowing you to work on your free time. Some great options include: 

• Dog walking or pet sitting  
• Babysitting or nannying  
• Content creation
• Freelancing
• Tutoring
• Ridesharing  
• Food and grocery delivery  
• Clinical trials or health studies  
• Survey websites 

Is a credit counselor worth it?

Whether a credit counselor is worth it or not depends on your specific needs and situation.

Credit counseling isn’t required, and it isn’t the right choice for everyone. It’s simply one option among many for managing holiday debt. 

A credit counselor is a trained financial professional (usually a non-profit) who helps people understand their debt and create a plan to manage it. Credit counseling agencies may offer:

• Budget reviews and financial assessments.
• Help creating a debt management plan.
• Education on credit, interest, and repayment strategies.

Some services are free or low-cost, depending on your situation. While results can vary, many people find that structured guidance helps them feel more confident and less isolated when dealing with debt. If you decide to use the credit counselor route, the National Foundation for Credit Counseling (NFCC) and the Financial Counseling Association of America (FCAA) are great places to start.