It’s not uncommon to feel a little blue this time of year – especially if you have a mountain of debt left over from the holidays. It’s smart to try and pay down that debt as quickly as possible, but slashing your budget and working extra hours can be tough when your energy is already at a low point. Before you take any drastic measures, consider these three (relatively) painless ideas for paying down holiday debt.
- Turn holiday gifts into cash.
Many of us receive gifts that we don’t really want or need during the holidays. Maybe you received a sweater that doesn’t fit, or a bottle of cologne you can’t use because you’re allergic. Instead of letting those gifts sit around, see if you can return them for a cash refund. Many stores will do cash refunds if you can provide a gift receipt. To save yourself an extra trip, check online first to see what the store’s return policy is.
The same idea can be applied to gift cards. Most retailers won’t let you turn a gift card into cash, but websites like Cardpool and CardCash let people turn in their unused gift cards for cash. Even though payouts are less than the face value of the cards, getting some cash you can use to pay down bills is better than getting something you don’t want or need.
If you were lucky enough to receive cash gifts over the holidays, it may already be spent at this point. But if you’ve managed to hang on to it, consider using it to whittle down your post-holiday bills. The peace of mind you get from owing that much less will be worth it.
- Use your tax refund.
If you’re getting a tax refund, put that money toward those bills. It’s a move that will have a long-lasting effect on your financial health – and your peace of mind.
- Pay off smaller balances first.
Sure, it’s true that you’ll pay less interest in the long run if you pay down your highest-interest balances first. But some personal finance pros say you’ll be more motivated to keep at it if you pay off your smallest balance first and then move on to your next smallest balance. That approach, widely known as the snowball method, is a favorite tactic of financial guru Dave Ramsey. Ramsey and other snowball advocates believe that the satisfaction of those small wins can help you stay inspired enough to keep at it. And as you pay off each smaller balance, you’ll have that much more money each month to attack debts with a bigger balance.
Keep the Momentum Going
Once your efforts pick up steam and you see those balances shrinking, you may be inspired to take on a part-time job or take bigger steps toward becoming debt-free. And when you’re not hampered by debt, you can start doing bigger and better things with your money – like investing for the future or making a down payment on a house.