How to Pay Down Debt Before the Holidays

When you’re neck deep in debt, the holidays can seem daunting. If you’re struggling, don’t fret. There is a way to pay down your debt before the holiday rush. Here are some steps to take.

Think First

The first step to getting rid of debt is to understand how you got into the red in the first place.

• Assess Financial Habits. That means taking a good, hard, honest look at your financial habits. If you’re drowning in credit card debt, this can be relatively easy (though not painless).
• Review Spending. Look back at your last six months of bills and see where you spent money. Oftentimes, the expenses that put you into debt weren’t considered essential, like food, housing, or transportation.

For example, a recent study found that almost a quarter of young people are going into debt because of expenses related to dating. While everyone wants to find love, that is certainly an area that could be addressed.

Consider a Card Change

When you’re dealing with credit card debt, it doesn’t hurt to try and work with your credit card issuer about your options.

• Make the Call. Start by calling your financial institution to ask for help.
• Negotiate Lower Rates. If you’ve been making consistent payments and are in good standing, most financial institutions will try to work with you on options that may include reducing your interest rate.
• Balance Transfer. You can also look into a balance transfer card. Again, if you’re in good standing with your payments, your bank or credit union may offer a balance transfer card with a low or 0% introductory rate. This will allow you to pay down debt without getting crushed by a high rate. 

Commit Yourself 

The aggressiveness of your debt payoff strategy depends on the amount of debt and your willingness to make lifestyle and budget changes. Big budget and lifestyle changes will help you pay off debt faster, but the tradeoff is substantial lifestyle changes, even disruptions. And keep in mind, these budget and lifestyle changes are short-term, just until your debt is paid off.

Small Budget Cuts

If you have a small amount of debt and a limited budget, small adjustments may be sufficient to pay off your cards or loans. Most likely, this will include cutting back or sacrificing the non-essential expenses, things like:

• Entertainment. Cut out unnecessary subscriptions and spend less on concerts, sporting events, and movies. etc.
• Fitness. Downsize fitness club membership, switch to a community center for your workouts, and download fitness apps to work out at home.
• Travel. Find cheaper options for vacationing, like driving instead of flying, staying in short-term rentals over hotels, and shopping for discount travel options.

Target Larger Expenses

However, if you have a large amount of debt, it’s likely going to take more than just adjusting a budget to make some headway. If you’re serious about paying off debt quickly, you may consider cuts to your essential expenses, which may have a greater impact on your day-to-day life. This includes things like:

• Transportation. Downsize your car, look into public transit options, or, as difficult as it may be, change your work situation so you can work remotely to cut transportation expenses.
• Housing. Downsize your house or apartment, get a roommate, or move in with family or friends.
• Food. Cut out DoorDash and other food delivery, pack your lunch, shop at discount grocery stores, eat at home more often, and eat leftovers to stretch your food budget.

Do One Thing: Get out of debt before the holidays by starting now.