How to Get Over a Holiday Debt Hangover

December 26, 2007 By Matthew Paulson

Most people in the United States have very little savings, so when Christmas time comes they use their credit card to purchase all of their presents. They easily spend anywhere from a couple of hundred to thousands of dollars on presents thinking it perfectly natural and not do not consider the financial consequences of all of their purchases. Some people end up paying for Christmas presents over a period of several months because they can’t take care of the bill all at once. Nobody wants to be paying for last year’s Christmas presents in June! If you’ve spent a bit too much on presents this year, here’s how to get back in the black.

The first thing you need to do is establish how far of a hole you’ve dug. How much did you spend on presents this year? Where did that money come from? Once you know how far deep your hole is, you’ll have a pretty good idea of how hard you have to work to get yourself out of your Christmas debt.

For the sake of this discussion, let’s say that you spent $1,000 on Christmas presents this year. That means your net-worth is $1,000 lower than it would have been otherwise if you had not purchased Christmas presents and to make up for it, you’re going to have to find an extra $1,000. It might seem like a big number, but it’s actually not that much money when you break it down.

Taking care of any Christmas debt on your credit cards should be your first priority. Usually they come with interest rates of 10-20%, so we want to get rid of them before compound interest really starts to work against you. If you have any decent chunk money in savings, it probably would make sense to throw that money on your credit card and then rebuild your savings account to avoid the nasty interest rate. If you don’t have a lot of money in savings, you can still take care of your Christmas debt the old fashioned way—work!

In order to come up with the extra money needed to cure your holiday debt hangover, ask your employer if you can work any extra hours for a couple of months. If that’s not an option, you can take a part-time job delivering pizzas at night. If you do that for a month straight, it’s really easy to make $1,000! You can take another part-time job doing whatever; you don’t have to particularly enjoy the job, since you’re only going to be doing it for a month or two.

If for whatever reason you can’t get a part-time job, you’re just going to have to sell some stuff. Chances are you got all sorts of presents if you gave a bunch of them away. Maybe there’s something you really don’t need and could get some decent money for in the classifieds, on craigslist, or on eBay. Usually selling stuff won’t get you all the way there though. Sometimes all it takes is good old fashioned budgeting. Plan where every dollar you make is going to go before the month begins. Don’t let yourself go out to eat or spend much of anything on luxuries until that holiday debt is gone. Make getting rid of it a priority in your life, cut back, and it’ll be gone in a couple of months!

There’s no reason to be paying for last year’s Christmas presents 6 months or later down the road. If you accumulated credit card debt this Christmas, get rid of it as soon as possible!

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