The Update

Tackling Holiday Debt: Your Guide to a Fresh Financial Start in the New Year

The holidays are a time for celebration, giving, and, let’s be honest—sometimes overspending. While it’s easy to get caught up in the joy of the season, January often brings the reality check: credit card bills, lingering loans, and expenses that seem larger than expected. But don’t worry—starting the new year with a plan to tackle holiday debt can set the stage for a financially healthier year.

Assess Your Debt

The first step in managing any financial challenge is understanding exactly where you stand. Take a careful look at all your holiday-related debt: credit card balances, personal loans, or even money borrowed from family or friends. Write down the total amount owed, the interest rates on each debt, and the minimum monthly payments. This clear snapshot helps you prioritize your repayment strategy.

Create a Realistic Budget

Once you know your debt, it’s time to create a budget that balances your income, living expenses, and debt repayment. Start by tracking your spending for a month to see where your money goes. Identify areas where you can cut back—like dining out, subscriptions, or impulse purchases—and redirect those funds toward paying down your debt. Even small adjustments can make a big difference over time.

Prioritize High-Interest Debt

Not all debt is created equal. Credit cards often carry higher interest rates than personal loans, meaning the longer you carry a balance, the more you pay in interest. Consider using the “avalanche method,” where you focus on paying off the highest-interest debt first while making minimum payments on the rest. Alternatively, the “snowball method” focuses on paying off the smallest debts first, giving you quick wins and motivation to keep going.

Explore Consolidation or Assistance Options

If your debt feels overwhelming, there are options to make repayment more manageable. Personal loans, balance transfer credit cards, or even credit counseling services can help you consolidate debt at lower interest rates. While these options aren’t one-size-fits-all, they can provide breathing room and simplify your monthly payments.

Build a Holiday Fund for Next Year

Once your current debt is under control, it’s smart to plan ahead. Opening a dedicated holiday savings account and contributing a small amount each month can help you avoid debt in future seasons. Even setting aside $25–$50 a month adds up, giving you the ability to celebrate without financial stress.

Stay Committed and Track Progress

The key to successfully tackling holiday debt is consistency. Celebrate small milestones, track your progress, and remind yourself why you’re committed to financial wellness. Each payment brings you closer to freedom from debt and sets the tone for a year of smart money habits.

The new year is the perfect time for a fresh financial start. With a clear plan, realistic goals, and consistent effort, you can tackle holiday debt head-on and create a stronger, healthier financial foundation for yourself.

Expand your Financial Education

Invest in your financial education this year by reading books, taking online courses, listening to podcasts or attending seminars on personal finance. You can also setup a 1-on-1 Financial Coaching session with RGCU. Our certified coaches can help you better understand financing, budgeting, credit, and more!