Landing in Vacation Debt? Your payment plan in 5 points
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Many people make a commitment not to overdo it during the holidays, only to end up in debt at the end of the season. If this has happened to you this year, don’t worry.
First of all, you are undoubtedly in good company. But also, sales have been more difficult to achieve this year due to supply chain issues and inflation, so you might have had a harder time staying on a budget.
If you’re starting 2022 with a bunch of vacation debt, you’ll want to get rid of it as quickly as possible. The longer you carry this debt, the more interest you will accumulate and the more it could hurt your credit score. Here are five steps to get rid of your vacation debt quickly and effectively.
1. Look at the big picture
Knowing the amount of your accumulated debt is your first step in paying it off. Take a look at your different credit cards and see what your balances entail. Knowing this total will help you better manage your debt.
2. See if there is a more affordable payment method.
If you have billed your vacation expenses on various credit cards, you could now be facing pretty high interest rates on your debt. If so, lowering those interest rates will make your debt easier and more affordable to pay off.
One option to consider in this regard is a balance transfer, where you transfer your various balances to a single card with a lower interest rate (or, ideally, an introductory rate of 0%). Another option is to take out a personal loan, use it to pay off your debt, and then pay off that loan at an interest rate that should be lower.
3. Rework your budget
You may need to cut back on some short-term expenses to free up money for debt repayment purposes. Take a look at your budget and see which expense categories are considered non-essential. Then consider cutting back on spending in these areas until you’ve reduced your debt.
4. Treat yourself
You might not have a lot of expenses in your budget to cut back. Or maybe you just don’t want to ditch your streaming services, morning coffee, and weekly take out dinner. If so, getting a little boost could help you pay off your vacation debt fast. Since this income will not be applied to other bills, you can use it to reduce your balance.
5. Get cash for holiday gifts you received but don’t want
The personalized knit sweater with your name on it that your aunt made is a holiday gift you’re probably stuck with. But if you’ve received gifts that you don’t really want or need, selling them for cash could leave you with a good amount of money to pay off your debt.
If you have gift cards in stores that you don’t really frequent, there are sites like cardcash.com that allow you to redeem them for cash. And you can sell electronics, clothing, and other items online through your local social media market page. Or have a good old fashioned garage sale.
Starting the New Year with vacation debt might not be ideal. But if this is the situation you find yourself in, don’t despair. If you are committed to paying off your debt, you might be surprised how quickly you can get rid of it. And once you do, you’ll be in a good position to start saving for next year’s vacation to avoid a repeat.
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