Money Management

People often go into debt over the holidays. Learn about the fastest ways you can get your holiday debt down to $0. 

Like an unwanted guest, holiday debt can stick around for a lot longer than you’d like. We’re not talking about a few months, either. Among Americans who went into holiday debt in 2022, one in three were still paying it off in December of 2023.

That’s what can happen if you only make minimum payments on your debt. And the longer your debt lingers, the longer it can affect your finances — and the more it can cost you in interest. The good news is that there are several methods you can use to get that debt paid off much more quickly.

1. Consolidate your debt at a lower interest rate

Holiday debt often ends up spread out across several accounts. A Chase card, an American Express card, a few store payment plans, and so on. Debt consolidation is a good way to simplify your payments and save on interest in the process.

There are two popular debt consolidation options:

Get a balance transfer credit card with a low intro APR: Many of the best balance transfer cards have a 0% intro APR on balances that are transferred over. You can bring over credit card balances, and sometimes other types of debt, and pay them down with no interest charges during your card’s intro period.Borrow a debt consolidation loan: Use it to pay off all your debt, and you only need to make payments on the loan going forward. You won’t get a 0% intro APR, but the rates on top debt consolidation loans tend to be lower than what you’d pay on most credit cards.

2. Do a no-spend challenge

No-spend challenges are when you limit yourself to spending only on the essentials for a certain period. You could do a no-spend weekend, week, or month. During that time, you can spend on what you need, such as groceries and utilities. You don’t spend on non-essentials, such as going out to eat or buying concert tickets.

I wouldn’t recommend doing this for longer than a month. It’s hard to only spend on necessities, if you’re following the rules and not stretching the definition of things you need. But when you’re dealing with debt, a no-spend challenge could be worth trying. It’s possible to save over $200 on a no-spend week. That’s money you can use to get rid of your holiday debt.

3. Pay off accounts with higher interest rates first

If you have multiple accounts to pay off, there are several strategies you could use. Debt consolidation normally saves you the most. But you need to qualify for a balance transfer card or a loan, and that can be hard if you don’t have a high credit score.

Another good option is the debt avalanche method. This is where you prioritize paying off accounts with higher interest rates. Here’s how it works:

Make minimum payments on all your debts. You need to stay current on them to avoid late fees and issues with your credit score.Put all your extra money toward your account with the highest interest rate. You can find the interest rates for all your accounts online.Once that account is paid off, move on to the account with the next-highest interest rate. Keep doing this until you’ve paid off all your balances.

Since you’re paying off accounts based on their interest rates, you save the most money on interest this way.

A quick word of warning here: If you have any accounts with a promotional 0% interest rate, see if it’s a deferred interest offer. With this type of offer, if you don’t pay off your full balance within the allotted time, you’re charged interest going back to the purchase date. Minimum payments often aren’t enough to pay off the balance in time. In this case, check how much you need to pay per month to pay off the account within the promotional period.

4. Earn money on the side and put it toward your debt

All kinds of side hustles let you earn extra cash on top of your regular work. Here are some examples:

Teach a skill you’re proficient in online, such as speaking another language.Drive for a ride-hailing or delivery service.Rent out a spare room in your home on Airbnb.Work as a dog walker or a pet sitter.

By devoting a few hours each week to a side hustle, you could earn hundreds of dollars per month. And if you find something you enjoy, you may even decide to continue doing it after you pay off your debt.

The holidays are expensive, and lots of people go into debt around that time of year. Whether you have $400 in holiday debt or $4,000, start taking steps to aggressively pay it back, so it’s not a thorn in your side any longer than necessary.

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Buying in an HOA might work out better than expected. Read on to see why. 

If you’re in the process of looking for a home, you may have certain parameters in mind. First, you may be working with a specific price range based on the amount of money a mortgage lender has pre-approved you to borrow. And you may also be looking for a home with lower property taxes so you can more easily cover the mortgage loan you sign.

When searching for a home, you may also be eager to avoid buying in an HOA (homeowners association) community. HOAs are notorious for imposing strict rules on homeowners. You also have to pay monthly dues when you live in an HOA community.

But unfortunately, dodging an HOA may be tougher than expected. HOAs govern almost 60% of recently built single-family homes, according to HomeLight.

That said, owning a home in an HOA isn’t all bad. In fact, you might benefit from an HOA for these reasons.

1. Less maintenance

When you live in an HOA, much of the exterior maintenance on your property is covered by your HOA. This means you don’t have to bust out the snow shovel or worry about keeping your grass trimmed regularly. If you’re someone who has a busy schedule with limited time for property upkeep, then you may find it beneficial to move into an HOA community.

2. A well-run HOA could result in a higher property value

HOAs are often mocked for imposing strict rules and imposing cookie-cutter aesthetics on home buyers and owners. But those rules have the potential to result in a higher home value for you. And that could benefit you in a couple of ways.

First, the more your home is worth, the easier it becomes to borrow against its equity, whether in the form of a HELOC, a home equity loan, or a cash-out mortgage refinance. Also, if you decide to sell your home, you may find that you’re able to get a higher price for it. A University of California at Irvine study cited by HomeLight found that single-family homes governed by HOAs sell for an average of 4% more than non-HOA properties.

3. Access to amenities you may not be able to afford yourself

If you’ve ever dreamed of owning a home with a swimming pool, you may be well aware that putting in a pool and maintaining it is a very costly endeavor. If you can share in that cost by buying a home in an HOA community with a pool, that amenity might be more attainable. You might also get access to onsite perks like a clubhouse you can use to host events, instead of having to cram guests into your living room.

4. You might benefit from some of those strict rules

Many people tend to bemoan the fact that HOAs can come with rigid rules. But some of those rules might work to your benefit. Let’s say you’re in a townhouse that shares a wall with two other homes. If your HOA imposes quiet hours starting at 10 p.m., that alone may be the thing that stops your neighbors from blasting music — and keeping you up when you want to be sleeping.

Your preference as a home buyer may be to avoid purchasing a home that’s part of an HOA. But if you can’t manage that, recognize that there are certain perks to belonging to one. However, before you buy, read the rules cover to cover so you know what you’re signing up for. You don’t want to end up in an HOA that’s restrictive to an extreme, and to the point where it makes you sorely regret your home-buying decision.

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