How To Crush Your Vacation Debt | Lifestyles

The holidays are gone without a trace. Well, almost. Long after the decorations have fallen, you still have debts lying around.

Don’t let this ruin your year. Here’s what you can do to take control of your vacation debt.


First, gather some important details about your debt. List your accounts for each type of debt you have. Maybe you’ve split your vacation purchases between two different credit cards and a “buy now, pay later” loan, for example.

For each debt, write down the amount you owe, the minimum payment amount, the interest rate, and the payment due date. Staying organized can keep bills from sneaking up on you.

Next, carefully review receipts for your vacation purchases, says Bruce McClary, senior vice president of communications for the National Foundation for Credit Counseling. “Compare it with what’s on your credit card statement to make sure you’re being charged accurately and that there are no mistakes that could prove costly,” says McClary.


Determine how much you can afford to repay each month. The 50/30/20 budget is a framework you can use to balance your debt with your income and other expenses. With this rule, 50% of your monthly income is spent on necessities, 30% on needs, and 20% on savings and debt repayment.

You can also use budget apps like Mint and You Need a Budget to automatically track your spending by category, says Jeff McDermott, a certified financial planner in Saint Johns, Florida.

“It just gives someone a baseline to get an idea of ​​’What do I normally spend? What kind of cash flow should I have to start paying off some of that debt? Y Are there things I’m overspending on that I should be able to cut back a bit to free up some money to tackle debt?” McDermott says.


Once you have a good idea of ​​how much you owe and your budget, set up a repayment plan. You’ll pay off your vacation debt sooner if you make more than the minimum monthly payments.

McClary suggests using online debt calculators or tools to estimate your debt-free date. “You can test strategies of adding different amounts to the minimum payments to see how quickly it would pay off.”

If you are unable to pay above the minimum on several debts at this time, you can take care of one at a time. There are two main methods for prioritizing repayment: debt snowball and avalanche.

With the debt snowball, you first pay extra on the debt with the smallest balance, while making the minimum payments on the others. Once you clear that debt, apply the amount you were paying to pay off the next smaller debt, and repeat. With Debt Avalanche, you focus on the account with the highest interest rate first.

“The avalanche, where you attack the debt with the highest interest rate first, usually makes the most logical sense. It’s the best from a mathematical point of view,” says McDermott. “The only downside to that is that sometimes it can be hard to feel like you’re progressing if that particular card is really high.”

Which method is right for you? Pick the one you’ll feel most motivated to stay on track with, McDermott says.


Here’s what you can do to speed up the debt repayment process:

CONSIDER CONSOLIDATION. Consolidation combines multiple debts into one payment, usually through a personal loan or balance transfer card. This approach can make it easier to manage your debt and reduce the overall interest rate you pay on it. Usually you will need a good or excellent credit score. Before applying, McClary suggests getting a copy of your credit report and checking your credit scores to get an idea of ​​your eligibility.

NEGOTIATE WITH THE CREDITORS. Picking up the phone can also pay off. “If you think the interest rate you’re being charged isn’t the best rate you could qualify for right now, talk to your credit card company and see if there’s a lower rate than they can give you or better terms on the card, says McClary.

EARN EXTRA MONEY. An increase in income gives you the opportunity to pay off your debts more quickly. You can earn money on the side (such as through a dog walking gig or a cash back app) or use a boon, like a tax refund.


NerdWallet: Tools and advice to pay off your debts

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