4 Ways to Jump-Start Your Holiday Debt Repayment Plan

Paying down your debt is a popular and noble goal to work toward. Of course, getting to that zero balance is easier said than done. Fortunately, there are some ways you can make the task a bit easier and increase the odds you’ll stay on track. Here’s how to jump-start your debt repayment plan in 2016 – especially all that debt you accumulated leading up to the holidays.

1. Keep Your Other Resolutions

The new year can be a great time to rebalance your budget — which will in turn drive more dollars towards your debt — since less spending often goes hand in hand with popular resolutions.

“If you are trying to lose weight or quit smoking, for example, you may find extra cash in your budget that would have gone to restaurants, bars, snacks or cigarettes,” Elizabeth Grahsl, a private banker with Prosperity Bank, wrote in an email. “If you can commit to just four to six weeks not shopping or eating out – which you’ve probably had enough of during the holidays, anyway — you might free up enough cash to repay those holiday credit card bills in full as they roll in.”

2. Think Small & Steady

Paying down big balances can get overwhelming and cause you to quit before you even got started. To stay motivated, break your big goal into smaller steps. “Focus on the different parts of your goal,” financial therapist Amanda Clayman wrote in an email. “First getting everything organized (yay, success!), then coming up with a spending plan that allows you to not incur new debt/pay more than the minimums (yay, success!), then putting the plan in motion.”

3. Minimize Credit Card Interest

You may be able to lower the costs of certain balances. For instance, “keep an eye out for credit card and lending offers in the mail,” Taylor R. Schulte, a certified financial planner and founder of Define Financial in San Diego, Calif., wrote in an email. “These offers can sometimes be a great tool to consolidate higher interest rate debt at a lower rate.”

If you do want to take advantage of a balance transfer credit card or debt consolidation loan, it’s a good idea to review the terms and conditions carefully. Some credit card offers could retroactively charge interest if you don’t pay a balance transfer off in a specified timeframe, making the debt more expensive. You’ll also want to check your credit to see what type of offers you might qualify for. Good credit scores of 750 or above (on a scale of 300 to 850) generally offer the best interest rates. You can see where your credit stands by viewing your two free credit scores each month on Credit.com.

4. Prioritize Payments

If your credit doesn’t qualify you for good offers, avoid taking on new debt to pay off old debt. And if you’re trying to pay down several credit cards, prioritize the payments. “Start with the debt that has the highest interest rate and put together a payoff plan that you can stick to,” Schulte said. “Be careful that you don’t make it too unrealistic, or you will likely fail and give up.”