How to Pay Off Holiday Debt
Many people overspend during the holiday season and end up in debt. If you find yourself in this situation, you should pay what you owe quickly to avoid accumulating further debt. Read on to learn how paying off debt works and some ways you can reduce – and ultimately pay off – your debt from the holidays.
How paying off debt works
When you work to pay off debt, you make regular payments that cover your principal (the amount you originally borrowed) and your interest (the cost you’re paying to borrow money). You’ll continue these payments until your principal balance equals zero. At this point, your debt will be paid off and you won’t have to worry about it again.
Types of debt payoff methods
There are several ways you can pay off debt, including:
The debt snowball method focuses on your smallest debts first. Once you eliminate the smallest debt, you apply the payments you previously made toward it to the next smallest debt. Repeat this process until you’re debt-free. With the debt snowball, you can build momentum or “snowball” your payments and stay motivated to keep going.
If you choose the debt avalanche, you’ll prioritize debts with the highest interest rates. Once you list all your debts from highest interest rate to lowest, you’ll put all your money toward the debt with the highest interest rate. As soon as that one is paid off, you’ll continue the process with the debt that has the second highest interest. The debt avalanche is worthwhile if your goal is to save as much money on interest as possible.
Debt consolidation is a method that involves rolling multiple debts into one, manageable payment. With this method, you’d ideally land a lower interest rate than your current rates. If you’re overwhelmed with debt and looking to simplify the process, debt consolidation can be a good move. You’ll only have to keep track of one debt and payment date, instead of multiple debts with varying payment dates.
Debt management plan
A debt management plan is set up by a credit counseling agency, which is usually a nonprofit organization. You’ll review your situation with a credit counselor, who can negotiate with your creditors for better payment plans.
These payment plans may contain fewer fees or lower interest rates. Once you start the plan, you’ll make a single monthly payment to the agency, which will distribute the money to your creditors on your behalf.
Ways to pay off your holiday debt
There are several ways you can reduce your holiday debt, including:
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. Create a budget and make sure you account for holiday debt payments. If you remain diligent and stick to your budget, you can work toward becoming debt-free.
Choose a debt payment strategy
Two common debt payment strategies you can use to pay off your holiday debt are the debt snowball and debt avalanche methods. With the debt snowball method, you pay off your smallest debts first. Then, you roll the amount you used to pay those first debts into paying off larger ones. The debt avalanche method initially prioritizes high-interest debts and then moves on to those with lower interest rates.
Get a cash loan
A cash loan can serve as a fast and easy way to pay off holiday debt. With a loan from Advance America, you can apply online, get approved, and receive your funds quickly. Consider whether this loan could be an opportunity for you to consolidate your debt into one loan and whether this loan comes with lower interest rates than what you’re currently paying on your holiday debt.
Get a balance transfer card
With a 0% balance transfer card, you can transfer a balance from one of your current cards to a new card. This option can help you avoid paying interest for a promotional period. If you know you’ll be able to pay off your holiday debt before the promo period ends, a balance transfer card may make sense for your financial situation.
Ask for help from friends and family
If you’re struggling with holiday debt, don’t be afraid to ask your friends and family for help. Just make sure you agree on repayment terms and put the plan in writing so that everyone is on the same page.
How long does it take to pay off debt?
There are several factors that will affect how long it takes you to get rid of your debt, including the amount of debt you have, the interest rate on your loans, and your repayment schedule. It can take anywhere from a few months to a few years to eliminate all debt. But by sticking to a debt payoff strategy, you may be able to speed up the process.
Which holiday debt repayment strategy is right for me?
The ideal holiday debt repayment strategy depends on your unique situation. If you want to stick to a specific strategy, utilizing a budget and methods like the debt snowball or debt avalanche can come in handy. And if you need extra help, you may want to get a cash loan or a balance transfer credit card.
Finally, if your friends and family are willing to provide financial assistance, this may be a great way to get the funds you need to get rid of your debt.
Why get a cash loan to pay off your holiday debt?
Some benefits of getting a cash loan to pay off your holiday debt include:
Receiving cash quickly
You won’t have to wait long to receive cash and pay off your holiday debt. Advance America can distribute your funds that same day or within 24 hours, depending on when you apply.
Easy application process
You can apply for one of our loans from the comfort of your home. We offer a fast and easy online application that you can complete within minutes.
You may not need good credit
You don’t need good credit to get an Advance America cash loan to pay off your debt. We’ll look beyond your credit history and may approve you even if you have poor or fair credit.
Advance America cash loans can help reduce your holiday debt
Do the math and make sure a loan is the right choice for you. Will it allow you to consolidate debt into one loan or give you lower interest rates?
Cash loans from Advance America may be able to help you consolidate and reduce your holiday debt. We offer payday loans, installment loans, and lines of credit that you can easily apply for online. If approved, you can receive your money as soon as the same day you apply.
Our loans can get you the cash you need to cover expenses and help you start paying off the debt you’ve accumulated during the holidays. Apply today!