Personal Finance

If you're still dealing with holiday debt, there's no need to be Scrooge

Key Points
  • Almost 3 in 10 shoppers are going into the holiday season still carrying debt from last year's festivities. 
  • Experts suggest crafting a strategy in two parts: Wrangle your debt and scale back your holiday budget. 
Robbie Jack | Corbis Entertainment | Getty Images

For some people, opening up a credit card statement is like a visit from the Ghost of Christmas Past.

Holiday shoppers are expected to spend generously this year, with the National Retail Federation estimating the average consumer's outlay at $1,007 for everything from gifts to food to holiday attire — a 4.1 percent increase from last year. Another analysis, from NerdWallet, anticipates an 18 percent jump on gift spending alone, to an average total $776.

But that doesn't give the true picture of the cost: 28 percent of shoppers are entering this holiday season still paying off debt from last year's festivities, according to NerdWallet.

Experts say that if you're among those still lugging around debt from last year, now is a good time to pause and strategize, before Black Friday week sets off a long stretch of frenzied spending.

"If you're going into the holidays with debt, your first priority should be to focus on paying it down," said Bruce McClary, vice president of communications at the National Foundation for Credit Counseling. "Everything else should be secondary. The worst thing you could do is dig yourself a deeper hole."

First step to keep things in check: Get a handle on your debt. Make a list, including balances and interest rates. That can help you figure out how dire the situation is, and the best strategy to pay down the debt, he said. (See infographic below for tips.)

Moves like asking your credit card issuer for a better interest rate, or using a low-rate balance transfer, could help make it easier to juggle debt repayment with ongoing expenses, McClary said. But keep your focus on the debt repayment, rather than a license to keep holiday spending big.

"Don't think about this as some kind of opportunity to rack up more debt," he said.

How to outsmart the holiday shopping season
How to outsmart the holiday shopping season

Then scrutinize your holiday budget.

"Take your list and start whacking it," said Mary Hunt, creator of

Maybe you can forgo the custom holiday cards, for example, scale back the holiday party or pass on the poinsettias. Prioritize your gift list, and look to scale back both in terms of whom you buy for and number of gifts, she said. (It's actually a good thing if you can't buy everything on your kids' wish lists.)

Look for opportunities to spend smarter on whatever holiday expenses you deem essential.

Most people have a few old gift cards kicking around, Hunt said; pair those with store sales and coupons to stretch your gift budget, or resell them online for cash to cover other holiday expenses. Homemade gifts can also be affordable and thoughtful.

"Check Pinterest for ideas," Hunt said. "You'd be blown away by what you can do for very little money."

Pay with cash where you can. Or if you must use a credit card, put purchases on a single card and keep the total to what you can afford to pay in full.

"Consider the total cost of what you're buying, and that would include the financing," said John Sheldon, an attorney with the National Consumer Law Center.

Any leftover debt just keeps the holiday debt hangover rolling forward, he said.

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