As the holiday season comes to an end, many Americans are finding themselves in a familiar position: grappling with new debt balances. A recent survey conducted by LendingTree revealed that 36% of American consumers accrued holiday debt this year, averaging $1,181 per person, up from last year’s $1,028. While this amount has decreased since 2022, it still signifies a financial burden for many.
Notably, 44% of those who accumulated debt did not anticipate doing so, reflecting the ongoing challenges of the current financial climate. Chief credit analyst at LendingTree, Matt Schulz, attributes this to rising prices due to inflation and the desire to find joy amidst a difficult year.
Demographic breakdowns show that parents of young children, millennials aged 28 to 43, and individuals earning between $30,000 to $49,999 were most prone to taking on holiday debt. Disturbingly, almost half of Americans still carry debt from the previous year’s holidays, according to WalletHub.
Moving forward, 2025 has seen paying off debt emerge as a top financial resolution, according to Bankrate. Schulz emphasizes the importance of starting this journey promptly, as being debt-free brings a sense of liberation that is highly sought after by many.
Consider these strategies to tackle your holiday debt effectively:
Negotiate your interest rates:
– 42% of those with holiday debt are facing high-interest rates of 20% or more.
– Consider transferring balances to a 0% interest credit card or opting for debt consolidation to lower overall costs.
– A proactive approach can significantly reduce financial strain.
Choose a debt pay-down strategy:
– Prioritize high-interest rate debts through the avalanche method or opt for the snowball method, starting with the smallest balances.
– Find a strategy that suits your preferences and keeps you motivated.
– Celebrate each milestone achieved along the way to maintain momentum.
Increase your savings:
– While focusing on paying off debt, it’s crucial to set aside funds for emergencies to avoid reliance on credit cards.
– Saving in parallel with debt repayment can break the cycle of debt accumulation.
– Be mindful of interest rates, prioritizing high-interest debt repayment over savings with lower returns.
Celebrate small wins:
– Acknowledge that overcoming debt can be challenging, especially after the holidays.
– Break down your debt repayment goals into manageable milestones and reward yourself when you reach them.
– Stay positive and focused, finding joy in the progress you make towards financial freedom.
In conclusion, navigating holiday debt requires a strategic and disciplined approach. By negotiating interest rates, selecting an effective debt pay-down method, prioritizing savings, and celebrating achievements, you can conquer your financial burden and pave the way for a debt-free future filled with financial security and peace of mind.
