The holiday season often brings indulgence, from extra spending to relaxed budgets. In 2024, Americans spent an average of $902 on holiday expenses, setting a record, according to the National Retail Federation. For those carrying holiday expenses into the new year, managing credit card debt can be a priority in 2025. Here are four steps to help regain control:
1. Assess Your Debt
List all debts, including balances and interest rates, to understand the full picture. Samantha Gorelick, a certified financial planner, advises against letting shame stop you from facing your finances, noting systemic challenges often play a role in debt accumulation.
2. Choose a Payoff Strategy
Consider consolidation options like balance transfer cards or loans to lower interest rates. For those with good credit, this can save money and speed up debt repayment. Alternatively, try the snowball method (paying off small debts first) or avalanche method (tackling high-interest debts first).
3. Build an Emergency Fund
Even as you pay down debt, save for emergencies. Automating small monthly contributions to a high-yield savings account can help avoid future setbacks. Valerie Rivera, a certified financial planner, emphasizes patience, as building three months of expenses might take years.
4. Seek Professional Guidance
For unmanageable debt, avoid risky settlement services and consider a debt management plan through a nonprofit credit counseling agency. These plans offer better terms without long-term credit damage, unlike settlement options that leave lasting marks on credit reports.
Managing debt requires persistence, planning, and a willingness to seek support when needed. Following these steps can help you start 2025 on the path to financial stability.
