Now’s the Time to Deal with Holiday Debt—Here’s How
- The debt snowball and avalanche methods can work well if you have debt on multiple credit cards.
- Starting a side hustle could give you the extra money you need to pay back your debts.
- Use windfalls for debt repayment or sell unwanted gifts for cash.
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If any holiday debt is still lingering, it's time to turn your attention toward clearing it. Even if it feels like a lot, you might not need debt relief yet. You have plenty of time to do a mid-year financial reset and fine tune your budget for the next holiday season.
Here's a closer look at some of the ways you could attack your holiday debt now. Bonus: If you end up going over budget this year, you can flip these strategies back on in January.
Use the Debt Avalanche or Debt Snowball Method
The two most common credit card debt payoff strategies are the debt snowball and the debt avalanche. Both methods involve paying the minimum balance on all of your credit cards each month to avoid late fees. Then, you choose a specific card to attack with all the extra money you can find each month until it's paid off.
With the debt snowball, you focus on the credit card with the smallest balance first. Once you've paid that off, you move to the card with the next-smallest balance, and so on. This is a great strategy if you want some quick wins to help you stay motivated.
The debt avalanche involves targeting the card with the highest interest rate first. This could be the way to go if your goal is to pay as little in interest as possible.
You could also work out a combination if you want. If you have a couple of cards with balances under $100 for example, you may prefer to knock those out first via the snowball method and then switch to the avalanche method for your remaining cards.
Re-Evaluate Your Budget
Now is a great time to make sure your money is going where you want it to go.
Look at your spending for the past couple of months, excluding holiday expenses, and identify areas where you could spend less.
A budgeting app may help. Some can even sync to your other financial accounts so you can see all your transactions in one place.
If you're struggling with the idea of giving up some budget items right now, set a time limit on some of your sacrifices. It might be easier to give up something you like if you know it’s only for 30 days or 90 days. You can change your budget next month if you decide that your priorities have shifted. Once you've paid off your credit card debts, you free up the cash you were using to pay it off. That’s when you could make different spending choices.
Earn Extra Money
It’s never the wrong time to start a side gig or sell items you don’t want or need for extra cash.
You could deliver groceries, walk dogs, tutor online, build websites. The list goes on. Get creative and think about how you could use your hobbies, skills, and talents to earn some money and say goodbye to your holiday debt.
For some people, side gigs can eventually turn into full-time jobs. This could give you more money and freedom than you have today.
Use Your Windfalls Wisely
Windfalls are unexpected sums of money that you receive without necessarily expecting or budgeting for them. If you get an extra holiday bonus, cash from your loved ones, or a larger tax refund, allocate it to your holiday debt.
If you don't love the idea of giving up your entire windfall for debt repayment, consider splitting it up. Reserve a certain amount for whatever you like and put the rest toward your debts.
Take Advantage of Unwanted Gifts
Most of us have received a gift we’ll never use. If it’s a gift card to a store you don’t shop at, you can trade it in for cash through an online gift card exchange site. Use the money to pay down debt.
If it’s an item you’re not a fan of, you may be able to return it for something you need, freeing up money in your budget that month. If you can’t return the item, consider selling it through an online marketplace. To figure out what to charge, search online for the exact same item.
Use Coupons
Coupons are a great way to save money on groceries, household supplies, restaurants, entertainment, or just about anything else. To claim coupons, enroll in rewards programs at your favorite stores, pick up weekly ads while you’re out shopping, use social media, and check your receipts. You could also print out coupons or download their digital versions on coupon websites. Or use browser extensions that automatically detect coupon codes for the site you’re visiting.
Don’t Be Afraid to Ask for Help
The above tips are a great place to start if you're trying to deal with your holiday debt. If you're still struggling after a few months, it may be time to explore some other options.
Companies like Freedom Debt Relief can help you explore all your options, including debt settlement. This is where you or a company working with you negotiates with your creditors to get them to accept less than what you owe them. If they do, you're off the hook for the rest of the debt.
Debt settlement could give you a chance to work toward a stronger financial future. Once you've gotten rid of your debts, it could be easier to save money for future holiday seasons so you don't need to take on holiday debt again.
Debt relief stats and trends
We looked at a sample of data from Freedom Debt Relief of people seeking a debt relief program during June 2025. The data uncovers various trends and statistics about people seeking debt help.
FICO scores and enrolled debt
Curious about the credit scores of those in debt relief? In June 2025, the average FICO score for people enrolling in a debt settlement program was 594, with an average enrolled debt of $26,445. For different age groups, the FICO scores varied. For instance, those aged 51-65 had an average FICO score of 591 and an enrolled debt of $28,619. The 18-25 age group had an average FICO score of 556 and an enrolled debt of $15,107. No matter your age or debt level, it's reassuring to know you're not alone. Taking the step to seek help can lead you towards a brighter financial future.
Personal loan balances – average debt by selected states
Personal loans are one type of installment loans. Generally you borrow at a fixed rate with a fixed monthly payment.
In June 2025, 44% of the debt relief seekers had a personal loan. The average personal loan was $10,718, and the average monthly payment was $362.
Here's a quick look at the top five states by average personal loan balance.
| State | % with personal loan | Avg personal loan balance | Average personal loan original amount | Avg personal loan monthly payment |
|---|---|---|---|---|
| Massachusetts | 42% | $14,653 | $21,431 | $474 |
| Connecticut | 44% | $13,546 | $21,163 | $475 |
| New York | 37% | $13,499 | $20,464 | $447 |
| New Hampshire | 49% | $13,206 | $18,625 | $410 |
| Minnesota | 44% | $12,944 | $18,836 | $470 |
Personal loans are an important financial tool. You can use them for debt consolidation. You can also use them to make large purchases, do home improvements, or for other purposes.
Regain Financial Freedom
Seeking debt relief can be the first step toward financial freedom. Are you struggling with debt? Explore options for debt relief to regain control of your finances. It doesn't matter how old you are or what your FICO score or credit utilization is. Take the first step towards a brighter financial future today.
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Author Information
Written by
Kailey Hagen
Kailey is a CERTIFIED FINANCIAL PLANNER® Professional and has been writing about finance, including credit cards, banking, insurance, and retirement, since 2013. Her advice has been featured in major personal finance publications.
Reviewed by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
How do I get out of holiday debt?
You can use several strategies to get out of holiday debt, including the debt snowball or avalanche methods, adjusting your budget, or starting a side hustle. If you received a windfall like a tax refund or end-of-year bonus, you can put this toward holiday expenses as well.
Is $5,000 in credit card debt a lot?
Whether $5,000 in credit card debt is a lot depends on your personal situation. If you can comfortably pay it off at the end of the month, you may not consider it to be a lot. But if you wind up carrying a balance from month to month, that could be a sign that you could benefit from making debt repayment a focus going forward.
How can I pay off my debt if I don't have a lot of money?
Looking for ways to increase your income, like starting a side hustle, is a solid option if your regular job doesn't provide the income you need for debt repayment. You could also try using windfalls, like a tax refund or a year-end bonus to pay back your debts.
Personal Finance
Personal Finance
