Many people overspend on their loved ones during the holidays, even going into “holiday debt” to do so.
If that sounds like you, don’t worry – you’re not alone.
In fact, a recent survey found Americans racked up an average of $1,054 in debt this past holiday season.
We want to help, so here are seven detailed tips to eliminate your holiday debt fast.
Table of Contents
1. Turn Gift Cards into Cash
Gift cards are always a popular gift this holiday season. But let’s be real; sometimes you just want the cash.
How much of your balance can you get? Your mileage may vary, but in general, expect to get roughly 75% – 85% of your gift card balance. For example, I ran a few cards through CardKangaroo’s system and this is what it returned:
Of course, nothing is better than using the full amount. So in this case, $50 would be better spent at Target buying something I already have to spend money on, such as groceries or hygiene products. That’s a smarter financial choice over taking the 86% offered by CardKangaroo.
But sometime’s you just need the cash or the store card doesn’t offer anything you need. In those instances, a cash-for-card site could come in handy.
2. Do a Quick Search For Unclaimed Money
Searching for unclaimed money is so fun it’s borderline addictive. What can be more fun than finding out how much money you are owed and then claiming it?
With an estimated $42 billion in unclaimed funds, there’s a decent chance you will discover some money in your name.
How to search for Unclaimed Money:
Here’s what happened when I ran a search for myself on Unclaimed.org:
Admittedly, the dollar amount owed is not too impressive in my case. But I’ll be receiving a check soon for very little effort.
Side note: It’s also fun to find money for family members. It’s exciting to call them and tell them the good news.
A friend of mine even searches for her favorite celebrities just for fun (Psst, Luke Perry if you’re reading this, you’ve got a check waiting for you).
3. Exchange Your Frequent Flyer Miles and Reward Points for Cash
I’ admit this isn’t the most exciting way to use your points, but it makes a lot of sense.
Many credit card companies let you take your reward points and turn them into cash to pay down the debt on those cards. Some of the more popular cards with this debt saving feature are:
Keep in mind, creditors usually have their own formula outlining how many points equal a dollar.
- Chase Ultimate Rewards: 100,000 points = $1,000
- AMEX Membership Rewards: 100,000 points = $600.
It’s a great idea to log in to your account or talk with a representative about taking advantage of this option.
Even if you had plans for using the points for a vacation, it’s still wise to use the points to pay down the debt because the interest charges are expensive and really add up over time.
4. Sell Your Stuff
You’d be surprised how easily you can sell your unused items online.
Some of the more popular items which sell fast and garner a nice price are unused tech, luxury clothes, and furniture.
For example, a new or refurbished iPhone 6 is worth about $250 on eBay while the used model is grabbing around $150-$180.
Look around your home and see what you can part with to pay down your holiday debt.
Here are some marketplaces to help you get rid of your stuff for cash.
- Unused Tech: Sell at eBay, Decluttr, and Gazelle
- Luxury Clothes: Sell at TheRealReal, Poshmark
- Furniture and more: Sell at LetGo (App), OfferUp (App), Facebook Marketplace
5. Take Advantage of Insurance Dividends, Discounts, and Perks
Many insurance companies are mutual companies owned by shareholders, so they are required to give out a check or dividend at the end of the year.
These checks average $100 to $200 which could go a long way towards paying off your holiday debt.
Check your policies and see if you’re eligible for other discounts or rewards. For example, most insurance companies offer discounts. For example, good driver discounts average about 5% of the cost of your premium. The discount applies to every driver on the policy and you can receive the reward twice a year.
Health insurance companies also offer rewards for staying active.
United Healthcare offers $20 per month in reimbursements for your gym membership fees.
Even better, Oscar gives up to $400 towards gym dues for its members and up to $200 for a covered spouse.
Oscar even offers $1 a day for every day you do your 10,000 steps, up to $20 per month. That’s $240 for the year — a significant amount of money to throw at your holiday debt.
6. Make a Budget
Creating a budget sounds about as fun as going to the dentist. But just like the dentist helps to give you healthy teeth, a solid budget helps to give you financial fitness.
A detailed monthly budget is a great first step to eliminating debt and creating financial security.
Just keep it simple to start. Grab a piece of paper, or create a spreadsheet if you’d rather, and write down your income and all of your expenses. When you see what you spend you can identify the right places to trim.
While it’s popular to cut back on smaller items like your daily coffee, look for bigger opportunities if you really want to make a positive impact on your holiday debt.
How to trim your spending:
Get insurance quotes and see if you can save money with another company.
Call your credit card companies and see if they will lower your rates. If not, consider moving your high-interest cards to a 0% interest balance transfer credit card or a lower interest personal loan. Even Financial can help you consolidate up to $100,000. You type in your info, and they compare the interest rates from several lenders and let you know your best option. The information is free. Rates start at 4.99% and repayment terms are two to four years.
Unplug appliances to save money on your utility bill. This is especially true for older appliances which aren’t as energy efficient as newer models.
7. Make a Plan to Get Out of Debt
Combine your budget with a logical strategy to get out of debt.
Unbury.Me is a helpful resource to get you headed in the right direction. You type in your debt amount, your cards, and your interest rates and they’ll give you a free plan to get out of debt.
You can choose between the debt avalanche or debt snowball methods.
Economists usually recommend the avalanche method because it means paying off the credit card debt with the highest interest rates first. This method saves a little money and pays off debt quicker for those who are disciplined.
With the snowball method, you pay off the debt accounts with the lowest balance first. Once that account is paid off, take the previous monthly payment and apply it to the account with the next-lowest debt.
The snowball method has a higher success rate than the avalanche method. Like losing weight, most people are more motivated when they quickly see progress.
Whatsthecost.com is a similar free resource offering snowball method plans to become debt free.
Whichever method you choose, be consistent with your payments and celebrate milestones every time you pay off an account. Remember, getting rid of debt should be fun.
Conclusion: How to Get Rid of Holiday Debt Fast
We applaud your kind spirit if you have holiday debt after giving to your loved ones. While your generosity is admirable, take steps this year to avoid repeating the debt cycle. Consider opening a holiday savings account and saving incrementally throughout the year to achieve your goal. Your future self will thank you.
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