They don’t call it the silly season without good reason! Whether it’s stocking up on gifts for friends and family or running up a bit of credit on a holiday house rental, Christmas can often be a time where we spend a little more than we should. If you find that you’ve overspent this past Christmas, here are 11 tips on how to pay off Christmas debt and beat the Christmas blues quickly and easily.

1. Make a List and Check It Twice!

Christmas might be over, but now it’s your turn to be making a list (and checking it twice). Open up a spreadsheet or grab a notepad and pen and make a list of everything that you owe. This should include the amount, the credit card or loan it’s associated with, and when the final payment is due.  Don’t worry if you feel a little naughty going over what you owe. The most important thing is to be thorough and create an itemised list of all the debts you accrued over the holiday season.

2. Halt Unnecessary Spending

While holiday sales can be alluring, if you want to pay off that Christmas debt, now is the time to put a halt to discretionary purchases. Get in control of your finances by limiting outgoing expenses to necessary bills and expenditure, which will help you pay off your debts much faster and easier. This can mean cutting take-out meals, dining out, subscriptions, beauty treatments etc., until your debt is paid off. 

3. Make a Payment Plan

If you’ve racked up more debt than is feasible to pay back in a few weeks, then you’ll need to organise a payment plan. Identify how much you can part with per week (or fortnight). If you owe on multiple credit cards or personal loans, try the avalanche method to target those with higher interest rates first and work your way down. You can also do the snowball method popularized by Dave Ramsay. It's done by making payments on all your debts starting with the smallest one, then work on the next bigger one until you arrive at the largest debt. When it comes to the largest debt, you pay it with all the money you have until it's gone. 

4. Limit Additional Loans and Borrowing

While you’re paying off the debt you’ve incurred over the holiday season, you’ll want to avoid taking out additional loans. Also, avoid extending your credit or borrowing more money. Otherwise, you run the risk of falling into a debt spiral. Ideally, you don’t want to incur any more debt at all. While we can’t always live in a debt-free world, it’s best if you avoid further debt over the first few months of the year. 

5. Create a Budget for the First Quarter of the Year

You’ll want to pay off your debt as quickly as possible, but you won’t want to feel the squeeze for too long. Create a budget for the period from January through to the end of March. Make sure you allow yourself a realistic amount of money for things like entertainment. Allocate some money to reward yourself at the end of March for all of the saving you’ve been doing! Having that budget laid out in front of you will act as a motivational touchstone when you're feeling the pinch, and give you something to look forward to. 

6. Consolidate your Credit Card Debt

If you have a considerable amount of credit card debt, it might be an option to consolidate the debt under a single card with better rates. Balance transfers can help pay off that excess Christmas spending. Not only might you have a better overall interest rate, but it’s genuinely easier to manage debt on one card than when it is spread across multiple cards and accounts. 

7. Estimate your Tax Return

By the time January rolls around, you’re only six months away from tax time. If your debts are considerable and you’re not sure if you can pay them back within the first quarter of the new year, your income tax return could provide relief down the track. Calculate an estimate of what you might get back from the tax man, and factor this into your debt payment plan.

8. Start Saving for Next Year

Once you’ve paid off your debt, it’s time to start saving for next year so you can avoid the squeeze come next holidays. First, work out how much you spent on gifts this time around, that can be your target. You may want to adjust based on anything different (maybe you hosted Christmas this year, but someone else is next year). Next, work out how many months are left before Christmas. It’s as simple as dividing the amount you need by the number of months. The figure is how much you need to save per month. Easy!

9. Do Secret Santa Instead of Buying Individual Gifts

Buying gifts for everyone you love and care about is great, but it can also be expensive. One way to avoid Christmas debt in the future is to participate in a Secret Santa gift exchange. Everyone in your family or friendship group picks someone’s name out of a hat. Working on an agreed-upon budget, gifts are given anonymously. Not only is it a lot of fun, but it seriously reduces the amount of spending required for holiday gifts. That’s one sure-fire way to avoid going into Christmas debt next holiday season.

10. Sell What You Can

To pay your debts easier, you can sell the items you don't need any more but still are good enough to be useful to others (i.e. gifts you received over Christmas but will never use). Set a day to go over your house and check for unused items which you can sell online or in a garage sale. These items can be kitchen gadgets that you are not using, old toys, clothes you seldom use, accessories, tech items etc. One man’s trash is another man’s treasure – turn yours into profit!

11. Get a Part-Time Job or a Side Hustle

If you have extra time, getting a part-time job or freelancing can help you raise extra money to pay off your debt. Examples of such part-time jobs include freelance writing, photography, helping a local business with their marketing, IT-related work, doing errands like personal shopping or gardening and the like. If you are successful with this strategy, who knows – you might even be able to make it full time!

12. Seek Professional Debt Assistance

By following these 11 simple steps to pay off Christmas debt you’ll not only provide yourself with a little financial relief but also set yourself up for a debt-free Christmas next year!  If you're in serious debt, don't worry! Free, confidential help is available from Credit Counsellors Australia. Just call us on 1300 003 328 or send us an email via enquiry@creditcounsellors.com.au.