Credit Basics


Holiday Debt? Our Top 10 Hacks to Get Debt-Free Fast

If you’re starting the new year under the burden of old debt, you are not alone. Last year, Americans racked up an average of more than $1000 in holiday debt, according to financial experts at CNBC. Making only the minimum monthly payment on credit card debt, it could take years to get out of that kind of a financial hole. Here are some tips to help you tackle debt quickly and get a fresh start for the new year.

Stack Your Debt

To pay off debt fast, the experts at The Balance recommend a technique called “debt stacking.” In debt stacking, you list out all your debts, starting with those that have the highest interest rate. First, make the minimum monthly payment on all debts to avoid additional fees. Then take any additional money you have available and put it toward paying off the debt with the highest interest rate, regardless of the amount owed. This technique can require some patience as you may continue to carry multiple balances for a while, but ultimately, you will end up debt-free faster than if you start paying off debts with lower interest rates first.

Reduce Expenses Now

Utility bills can skyrocket in cold winter months, especially if you live in an area where temperatures drop significantly. When you are trying to save money to pay down debt, the last thing you need is an extra-hefty heating bill to set you back. Check out our top tips for keeping your heating bills in check this winter.

But it’s not just utility bills that can set you back. Car repairs, medical expenses, appliance breakdowns, and even unexpected job loss can happen at any time and turn short-term debt into a long-term nightmare. Be prepared for these unexpected expenses and don’t let them sidetrack you from reaching your goals.

Turn Clutter into Quick Cash

If you received any gifts this holiday you don’t really want or can’t really use, don’t let a sense of guilt or obligation keep it cluttering your closet. Remember, the gift-giver gave you the gift because they care about you and wanted to make you happy. If returning it to the store for cash or selling it online can help you get out of debt, there should be nothing holding you back.

Gifts are not the only clutter you can use to pay off holiday debt. Why not make a resolution this year to clean out your closets and get rid of things you don’t need? Apps like Letgo can help you sell unused items fast. The cash you make can go toward paying all those nagging holiday bills.

Put Gift Cards to Work

If you received gift cards to any megastores, it can be tempting to use them for electronics, clothes or other fun gifts. But if you are in debt, consider giving yourself the gift of saving. Using your gift cards on groceries or school supplies may not sound like fun, but keep in mind that every dollar you save on those necessities can be put toward paying down your debt. With your eye on the prize of living debt-free, gift cards are one more tool you can use to reach your goal.

If you received gift cards you can’t use for practical spending, consider trading them for cash on a site like Cardpool or CardCash, which let people turn in their unused gift cards for money. Be advised, payouts are less than the face value of the cards, but in some cases, that may be the best use of a gift card when you have debt to pay.

Increase Your Income

Taking on a part-time job or taking advantage of opportunities to make money from home can help give you the boost you need to make higher payments and get out of holiday debt faster. The website SnagAJob lists a wide range of part-time jobs available in your area now, and you can apply online.

You don’t need a formal job to make extra cash. Post babysitting or pet walking services on your church or community center bulletin board. You can also take advantage of snowy days by offering to shovel neighbors’ driveways and sidewalks for money. Need more ideas? Check out our list of 5 fun ways to make extra money.

Small Steps to Big Goals

Chances are, it took a while to build your debt, so don’t get discouraged if you aren’t paying it off as quickly as you’d like. The important thing is to keep making steps toward your goal. Every small step will get you closer to paying off your debt once and for all. If you find yourself overwhelmed by numerous bills, late fees, and penalties, consolidating debt with an installment loan may help you get back on your feet. Keep your eye on the prize, and look forward to how great it will feel when you are debt-free.