Did the holidays put you in debt? Here’s five ways to dig out of the hole

BOSTON — The holidays are over and the reality of credit card debt is sinking in for millions of Americans.

LendingTree’s Holiday Debt Survey found that 34% of consumers took on holiday debt in 2023, with the average person owing $1,028. It will take shoppers an estimated 5 months to pay off those balances, the company found.

“The reality is a lot of people didn’t plan to take on this debt,” Consumer Adviser Andrea Woroch said. “You’re looking at a lot of money being wasted on interest.”

Woroch has five steps consumers can take right now to dig themselves out of the hole.

ASSESS AND PLAN

Many shoppers use multiple credit cards. When you’re using a few different accounts, it’s easy to lose track of how much you spend and how much you owe.

“A lot of people fear looking at their credit card balances, and I get that. But the longer you ignore it, the harder it will be to make a plan,” Woroch said.

Woroch recommends looking at each account, writing down the interest rates, and deciding which debt repayment option works best for you. There are two options to pick from: the Avalanche Method or the Snowball Method.

“Debt tracking apps like Debt Payoff Planner will guide you through the process and help you stay motivated,” Woroch said.

BALANCE TRANSFER CARD

Consolidating credit card balances with a balance transfer card is another option. That will allow your payments to go further since they offer 0 percent interest for up to 21 months. Woroch said you can compare balance transfer cards at CardRates.com. Keep in mind, that many companies charge a fee upfront.

“As long as you stick to a certain strategy, you can shrink your balance [over that 21 months] without having to pay any interest,” Woroch said.

GO ON A SPENDING DIET

Try not to spend any money outside of the bare essentials for a few days, a week or a whole month. This means cooking in, packing a lunch and avoiding restaurants.

“This is definitely a little harder for some people. Sometimes extreme measures are necessary to nip those bad financial habits quickly. Think about all that extra cash you’ll have to pay off your debt faster,” Woroch said.

REEVALUATE BILLS

Cut useless spending from your budget by canceling unused subscriptions, reducing your mobile data plan and increasing your insurance deductible.

“Even if it’s only a few bucks a month, why waste that money? It’s going to help you save, pay off debt without sacrificing just by looking at your bills and cancelling things you don’t need,” Woroch said.

For help negotiating bills, Woroch says you can use Billshark.

REPLENISH SAVINGS

Woroch said this step may be the hardest, but continuing to save money is crucial in the event of a costly, unexpected emergency, like a car accident or medical procedure. If you have no extra money set aside, then paying for a rainy day is only going to drive you further into debt.

“At a minimum, aim to have at least one month of living expenses for those situations and open a high-yield online savings account to make your money work harder for you,” Woroch said.

This is a developing story. Check back for updates as more information becomes available.

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