How to Pay Off Holiday Debt Quickly

A man buying a gift online via credit card

A recent study has shown that Orlando is among the cities with a large number of residents who are stressed about their debt load. While the study revealed that Orlando was the only Florida city that made the top 10 cities where residents are most concerned about the amount of debt they are carrying, the trend is very likely to continue throughout the rest of the state as everyone continues to battle the pandemic.

The study did attribute the rise in concern over debt to the pandemic, but it is likely that holiday spending also has many people worried. With so many people losing their jobs during the COVID-19 crisis, more people were relying on credit, which means they also went further into debt. Fortunately,  there are ways to pay off holiday debt, and rather quickly too, so you can stop worrying about it for the rest of the year.

Evaluate Your Debt

Not all debt is the same, and you should not treat it as such. When being strategic about paying off your holiday debt, you must understand the type of debt you have and the nature of that debt.

Some of the most common forms of debt are as follows:

  • Credit cards: Often the first type of debt a person thinks of is credit card debt. You are likely paying an annual percentage rate (APR) on your card every month (unless it is a brand new card), which can add to the debt.
  • Retail cards: Retail cards are like credit cards but they are specific to one specific store. Many people sign up for retail cards during the holidays and if this is the case you may have a zero percent deferred-interest plan. If you do not pay off your balance by the time this plan expires, you will be charged full interest on the initial purchases you made.
  • Personal loans: Unlike credit cards and retail cards, personal loans typically require that you make a fixed monthly payment and they also have a set APR.
  • Financing: Financing that allows you to buy now and pay later is very commonly used when online shopping. These plans sometimes come with a deferred interest option and, similar to personal loans, the amount you are required to pay each month is typically fixed.

When evaluating the debt you owe, itemize all of your debts, the total amount you owe, the interest rate you are paying, and the minimum payment due. Once you have done this, you can then determine how you want to pay off the debt.

Budget to Make Payments

No one likes to talk about creating a budget, but you cannot think about repaying your debt without budgeting for it. The ideal way to conquer holiday debt is to pay as much you can afford towards it, even if it means making some small sacrifices in the meantime. Consider how much income you are earning, and how much of that you need for regular bills and expenses. Take a second job or pick up some side work if there is an opportunity, and use any holiday bonus you may have received to pay down your debt.

Determine How You Want to Pay Off Your Debt

You likely want to pay all of your debt off as soon as possible, but it is also unlikely that you can pay it all off with one lump sum.

As such, there are two common methods for paying off debt. These are:

  • The snowball method: When using the snowball method, you make the minimum payment on all of your debts. If you can afford to pay off more debt, that additional money is then put towards your smallest debt. Once that small debt is all paid off, you can then move on to the next smallest debt. You can get rid of a debt one at a time, but because you are starting with the smallest debt, you can do it relatively quickly, which can give you the momentum you need to get more excited about paying off even more debt.
  • The avalanche method: The opposite of the snowball method is the avalanche method. With this method, you tackle the highest debt first, while still making the minimum payment on all other debts. Once you have paid off the biggest debt, you move on to the next biggest. The advantage of paying off debt with this method is that you will not accrue high interest fees while you are paying off debt.

You may also consider opening a new credit card that offers a zero percent APR for balance transfers. Then you can move your debt with the highest interest to this new card and have a certain amount of time to pay it off without incurring additional interest charges. This option is typically only available if you have good credit.

Stick to the Plan

Too often, people are very eager to pay off their debt and find that they have a lot of discipline when doing so during the first few weeks or months. Over time, paying off that debt becomes a lot less exciting and so, many people simply do not stick to the plan. It is important to overcome this debt fatigue and make sure that you continue on with your plan until all of your debt is paid off.

One of the best ways to ensure that you continue paying off your debt is to set up automatic payments through your bank. Set the same date for every month that a minimum payment will come out of your account so that it’s predictable and expected. You can also set up automatic transfers so that when you deposit your paycheck, a certain amount is automatically transferred into a savings account, which you can then use to pay off your debt at the end of every month.

Struggling to Pay Off Debt? Call Our Debt Defense Lawyers in Florida

While the above tips are very useful when trying to pay off your debt, unfortunately, they do not always work. If this is the case and a debt collector has taken, or has threatened to take, legal action against you, our debt defense lawyers in Fort Lauderdale are here to help. At Loan Lawyers, we have the necessary experience to fight back against debt collectors, and we want to put that experience to work for you. Call us today at (954) 807-1361 or fill out our online form to schedule a free consultation and to learn more about how we can help.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation and find out more about our money back guarantee on credit card debt buyer lawsuits, and how we may be able to help you.