Help paying off holiday debt starts with these strategies

After years of being in debt, Rachel Kramer Bussel came to a realization: “If I don’t take action, I’m going to be in debt for the rest of my life.” For Bussel, a freelance writer based near Atlantic City, New Jersey, that meant spending to reduce and invest available money in paying off debt.

“Seeing that it’s going in the right direction helped me reinforce it,” she says. “I felt like there might be light at the end of the tunnel.” Bussel, whose debt stemmed from credit cards, student loans, and back taxes, eventually paid off all of her debt, which at one point exceeded $100,000, in 2020.

Paying off debt is a common goal as the new year begins. Bills for Christmas shopping and other end-of-year expenses often fall due in January, and this year, rising interest rates are making debt increasingly expensive. According to the Federal Reserve, revolving debt, which includes credit card balances, continued to rise throughout 2022, rising at an annual rate of 10.4% in October, the latest figures available.

Try these strategies to attack your debt this month:


Elaine Grogan Luttrull, a financial educator and consultant in Dublin, Ohio, says it’s helpful to think about how this happened before making a plan to pay off the debt. “Was it pressure? Excitement? Habits? Find out what triggers led to this debt and hold on to the emotions for a moment,” she says.

“Let’s not berate ourselves, let’s be solution-oriented,” she adds. If you skip this introspective step, it can become difficult to take action, she says, because it’s easy to just deal with feeling bad about past choices.


Listing all of your debt with associated interest rates will help you get organized and decide what to pay off first, says Luttrull. She suggests starting with the debt that has the highest interest rate, also known as the debt avalanche method, but other people prefer the debt snowball method, where you start with the smallest debt first.

Next, look for money in your budget to divert to paying off your debt. Luttrull says that if your student loan payments are suspended, you could use that money to pay off credit card debt, for example. You can also look for cheaper ways to connect with friends, such as B. Organize game nights or go hiking.

Emma Johnson, founder of the website Wealthy Singles. Streaming services, gym memberships, and cable bills are popular targets. “Do a ‘spring cleaning’ on New Year’s Eve. What can you customize?” she asks.


With budgets so tight in the midst of inflation, making extra money could be the best option for raising the money to pay down debt. Cedric Nash, author of Why Should White Guys Have All the Wealth? and founder of the nonprofit Black Wealth Summit, says there are many opportunities in our tech-heavy world: “There’s a lot you can do from your living room . If you have technical skills, you could become a computer engineer, or if you’re good at math, tutors are paid upwards of $100 an hour. Take a look at your skills and then use them to pay off some of your debt and grow your wealth.”

Nash, who lives in St. Petersburg, Fla., says his friends earn an extra income by doing everything from DJing to hanging up Christmas lights.


If you can qualify for a credit card with a 0% effective introductory rate, transferring your existing credit card debt to that card can give you more time to pay it off without additional interest, says Matt Elliott, a certified financial planner and the founder of Pulse Financial Planning in Rochester, Minnesota. You might also consider seeking a personal loan with a lower APR than your cards.

“If you have decent credit, it could be an opportunity to reduce interest costs by transferring the balance to a 0% credit card or personal loan with a lower interest rate,” he says.


Rewarding yourself when you hit milestones, such as: B. Paying off a credit card is an essential part of staying motivated, says Nash. “Nobody likes paying bills all the time, so we need a reward system.” That could mean going on a trip or making a long-awaited purchase (as long as it doesn’t add to your debt).

To keep debt in check throughout the year, Johnson suggests starting new traditions: Instead of giving her Valentine’s Day gifts, for example, she writes personalized love poems to her children. “It’s really significant and they’re expecting it now. And it’s free.”

–Kimberly Palmer, NerdWallet

Kimberly Palmer is a personal finance expert at NerdWallet and the author of Smart Mom, Rich Mom. E-mail: [email protected]. Twitter: @KimberlyPalmer.

This column was provided to The Associated Press by personal finance website NerdWallet. The content is for educational and informational purposes and does not constitute investment advice.

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