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How to Deal with Holiday Credit Card Debt

The flurry of gift-shopping and overspending is finally over, leaving plenty of people with the dreaded holiday hangover.

Just a few weeks ago, a CIBC poll showed that Canadians were planning to spend nearly $600 for this past season’s holiday shopping. While that figure is about 8% less than last year, more than half of respondents expected to go over budget.

So, if you’re finding yourself with a high credit card bill this January, don’t worry. If you’re diligent, there are ways to slowly and surely combat your debt.

First, figure out how much money you can actually spare towards your debt. Don’t use all your spare money to put towards debt, otherwise you might have to borrow again to pay for your daily expenses, which is more than a little counterintuitive.

If the dues have really piled up—not only with your holiday credit card use, but with personal loans, too—you might want to consider consolidating your debts. You could get a consolidation loan, take on a secured or unsecured line of credit or refinance your home.

But whether you’ve decided to consolidate or not, consider one of two methods of debt repayment also known as debt-stacking or debt-snowball. The debt stacking method asks you to list all of your debts in descending order from highest interest rate first down. This strategy requires you to make minimum payments on all of your debts while directing the remainder of your funds towards the loan with the highest interest rate. The longer you stick with this one, the more it pays off.

The debt-snowball strategy asks you to focus on paying your debts from smallest amount to highest by making minimum payments on all your debt and putting the remainder towards the one with the lowest amount. Not only will you make some progress with all your debts, but you’ll likely clear up that holiday bill faster because you’ll see smaller debts disappear quickly, which will be a great feeling.

At the same time, make sure that while you’re killing your debt you also stop using your credit card! Incurring new debt will only make everything worse.

You can do it! Even if you’re starting 2017 with some debt, having a strategy will help you feel like you’re on the right path.