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3 Tips to Help Pay Down Debt During the Holidays

Three tips to help pay down debt during the holidays.

Photo by Anthony Shkraba on Pexels

Paying down debt can sometimes be a long and frustrating process. The average consumer owes $5,315 in credit card debt. If you too are chipping away at a significant amount of debt, it might make you feel better to know that many other consumers are in a similar situation.

No matter which debt elimination strategy you choose, it will likely involve some sacrifices on your end. Perhaps you're giving up some of your free time to earn extra cash through a part-time job or side gig. Or you might be saying "no" to purchases you'd like to make in order to cut expenses.

Whether you're earning more money, spending less, or doing some combination of both, the holidays can introduce new obstacles into your credit card debt elimination journey. But you don't have to let the fall and winter festivities derail your progress.

Here are three tips that can help you if you're trying to pay down debt during the holidays.

1. Plan ahead

It's normal to have added demands on your budget during the last few months of the year. Depending on the holidays you observe, you might be used to making extra purchases for Halloween, Thanksgiving, and Christmas, Hanukkah, or other holidays.

You can still give yourself permission to enjoy the holidays. Even when you're trying to pay down debt, it doesn't mean you can't celebrate and take part in time-honored traditions. However, you might need to make a few financial adjustments along the way.

The first step to staying on track with your debt payoff goals during the holidays is to create a budget for the extra expenses you will encounter. By creating a budget, you can keep your spending in check, and you can set aside some funds to apply toward your debt elimination goals at the same time.

If your budget is already tight (and you can't cut your expenses), you may need to keep your holiday spending budget small. But it's better to plan ahead for some spending rather than putting those purchases on a credit card that you'll have to figure out how to pay off (plus interest) later.

2. Look for ways to save

On top of budgeting for holiday-related purchases, you can work to make your dollars stretch. There are plenty of ways to get creative with your money around the holidays and still enjoy the season.

Below are a few ideas to provide you with a little inspiration.

• Make good use of your credit card rewards. Do you have credit cards that allow you to earn rewards on your spending? The holidays can be a great time to redeem the cash back or points you've accumulated throughout the year. Credit card rewards can provide an alternative way to pay for holiday gifts, meals, and more — all without taking away funds from your debt elimination goals. (Tip: Aim to pay off your full credit card balance each month. Otherwise, the interest you pay could offset the value of any credit card rewards you earn.)

• Try the do-it-yourself approach. From handcrafted Halloween costumes to homemade holiday gifts, making items from scratch can often save you money and hold special meaning for those who receive them. If you can use the DIY approach to spend less, you may have more cash leftover to apply toward your debt.

• Have a no-spend holiday. Giving gifts during the holiday season can often be a source of stress—not just for you, but also for your loved ones. So, it might be worthwhile to consider the gift of not giving during the upcoming holiday season. When you and your loved ones collectively remove the obligation to give presents (or find an alternative approach that works for you), it could remove financial pressure and help everyone enjoy the season even more.

If you find ways to enjoy the holidays with less money than you set aside in your budget, that's a bonus. Then, you could funnel unused holiday funds back toward your debt payoff efforts.

3. Take advantage of bonuses

During the holidays, there are times when you might come into extra cash, gift cards, gift certificates, and more. Some employers give holiday or year-end bonuses that could help boost your budget. Or perhaps you have students, loved ones, or customers who shower you with a little something extra around this time of year.

If you're fortunate enough to be on the receiving end of an extra bonus, consider putting at least some of that money to work for your financial benefit. Sure, it might be fun to take a trip or splurge on a big purchase when you receive an extra influx of cash. But keeping the momentum going on your debt payoff journey might be even more satisfying in the long run.

Bottom Line

Paying down debt can be a wise use of your financial resources. As you eliminate debt — especially credit card balances — you can save money on interest and reduce the strain on your monthly budget. If you reduce your credit utilization ratio, you might even improve your FICO® Score as a bonus.

It's understandable that you might want to slow down your debt payoff efforts during the holiday season. But try not to apply the brakes completely. Remember, every dollar of high-interest debt you pay off can be a step in the right financial direction.

Michelle Black

Michelle Black, Founder of is a leading credit expert, financial writer, and speaker with nearly two decades of experience. Her work has been featured with major outlets such as Forbes, Reader's Digest, and U.S. News and World Report.