Mortgage-Ready Credit: 9 Tips for Paying Off Holiday Debt

Posted by Laine Smith on 12/26/16 10:00 AM

Topics: Home Ownership Home Buying

December spending turns into January bill-paying. If you’re suffering from the post-holiday debt blues, you’re not alone. Americans add an average of $986 in debt throughout the holiday season with less than half planning to pay off that debt in less than 5 months, according to a survey by MagnifyMoney. Whether improving your credit score or decreasing your debt is one of your resolutions in 2017, here’s how to tackle those outstanding holiday balances.


Break Away from Your Credit Cards

First things first, step away from the credit cards. You can’t tackle a mountain of debt if you’re still throwing extra on the pile, so until those balances are paid down, stick to cash only.

Make Returns Right Away


If you decided not to gift something, return it ASAP, especially if you did your shopping early. Carrying the balance of even just one item results in interest payments for something you didn’t even use and you don’t want to miss your retailer’s return window.

Use “Rewards” Toward Your Balance

If your credit card gives you reward points to use and they offer the option of using it as a credit statement, do so! Every little bit makes a difference.

Start Your 2017 Budget


If you’re feeling overwhelmed by your holiday spending, there is no time like the present to set a plan of action for the new year. When the credit card statements start to roll in, sit down and make a specific goal of when you’d like to have each balance off. This handy payoff calculator shows you how much you need to allocate to meet your goals.

Sacrifice Your Bonus and/or Tax Refund

While throwing your holiday bonus or tax refund toward your holiday debt isn’t nearly as exciting as booking a vacation or going on a shopping spree, in the long run, it will save you.

Trim Down the Luxuries


Sometimes paying down debt means you have to put yourself on a financial diet. So whether you have to forgo your daily coffee to-go, nix that gym membership you rarely use or dine at home a few extra times a month, make a vow to cut one “luxury” to free up extra funds.

Choose Your Pay Down Strategy Wisely

Though the best strategy of paying down debt (focusing on higher interest rate debts) is pretty black and white, paying down debt is a psychological game. If you know you’ll be more motivated by instant gratification, go with the snowball method, which means focusing on paying on your cards with small balances and going to the next one when that account is paid off. Whichever method you choose, just make sure you’re making all of your payments (minimum and up) on time.

Regroup Your Current Belongings

The winter months are a great time to get your home organized and sift through belongings that you no longer need or use. If you were gifted a larger television, cell phone, laptop, etc., sell your old one and put the cash toward your outstanding debt.

Learn and Plan for Next Year


As your credit card statements roll in, keep track of exactly how much you spent on gift-giving, holiday parties, décor, etc. There’s no better time to get on board with saving for next year’s holiday season, even if you don’t want to start until your current debt is paid off.

Let’s say you plan to spend $1,000 come the 2017 holiday season and it will take you through March to pay down what you spent this year. That means you’ll still have 38 weeks in 2017 to save $1,000, which amounts to $26.31 per week. Set up automatic transfers from your checking to your savings so you have a plan of action for next year’s gift-giving.

If you’re planning to purchase a home in 2017, download our free Mortgage 101 Handbook for everything you need to know about the homebuying and financing process.

 Download: Mortgage 101 Handbook

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