3 Ways to Deal With Your Holiday Debt Before It Gets Out of Control

I was at the gym the other night when I overheard a man talking about how much he spent on Christmas gifts this year. I learned a lot about the guy: He loves to shower his mom with gifts, he bought an engagement ring he no longer plans on using, and he’s got a lot of credit card debt to pay off. It’s amazing the things people talk about within earshot of strangers.

While he was certainly aware of the thousands of dollars he had to pay in credit card bills, he didn’t seem too troubled by it. It sounded like he planned to finance the holiday purchases all along, but I wonder how much thought went into that strategy, given how long it can take to pay down credit card debt. If you have high credit card balances after the last several weeks of shopping, you might want to plug your information into this credit card payoff calculator and see how much you need to put toward those bills each month to get debt free within a few months, or whatever your debt-payoff timeline may be.

Of course, as I listened to this guy talk about the $1,500 he spent on his mom, I couldn’t help but think of questions I wanted to ask him about his plan for tackling that debt and the tips I would share with him, based on his responses. Because it’s generally considered strange and rude to join strangers’ conversations about personal finances, I’ll settle for writing this blog post.

If you’re the guy who walked into the Michigan Avenue Gucci store and bought a pricey bag to prove a point to the seemingly snooty staff, this one’s for you.

1. Open a Balance Transfer Card

If the debt you’ve accumulated resides on a credit card with a high interest rate, you may want to explore 0% financing offers on balance transfer credit cards. This strategy requires a little math and firm commitment to your plan.

Make sure you know exactly how much you’ll be paying in fees when you transfer the balance and how long you have 0% financing. You can use the debt payoff calculator mentioned above to determine how much you need to pay each month in order to eliminate your debt within that period.

During this payoff time, it’s crucial you not add to your balance, because that will only make your goal more difficult (and expensive) to achieve.

2. Get Your Money Back

If for some reason you haven’t yet handed out the expensive gifts, you may want to consider returning some. As the guy at the gym said, “It’s my mom, so it’s worth it, but man, I just spent $1,500 on my mom for Christmas.” Mom will probably be happy with the Gucci bag. The Jimmy Choos can wait for next year. (Yes, he also bought her designer shoes.)

In the likely event you already distributed your gifts, take a look at your own haul. You don’t want to insensitively get rid of gifts someone thoughtfully picked out for you, but if you find yourself with things you don’t need or gift cards you don’t plan to use, consider selling them to help pay off your debt. Even exchanging an unwanted item for something you need could help you save money, if you were thinking of buying it anyway. Any way you can cut back on spending in the coming months will help you repay your credit card debt faster.

3. Take Out a Personal Loan

If you’re looking at several months or years of debt repayment, you may be better off consolidating the high-interest credit card debt with a personal loan at a lower interest rate. Again, it’s crucial you not add to the debt during or after you’ve repaid it, because that will drag out your debt issues and cost you more money in interest. It’s not necessary to consolidate credit card debt, but sometimes, that’s the best way to make repayment manageable.