Did you spend more than you planned to make the holidays merry and bright? You're not alone. According to a LendingTree survey, 36% of Americans racked up over $1,000 in debt, on average, during the 2024 holiday season. More than half of these shoppers (56%) didn't intend to.
Fortunately, you don't have to let that holiday spending hangover stick around too long. Here's how you can pull yourself out.
Read more: How to Get Out of Credit Card Debt
How to get back on track after holiday overspending
If you spent more than you budgeted over the holidays, these steps can help you chart a course forward for your finances.
1. Assess the damage
First things first: You need to determine how much you're in the hole. Analyze your entire holiday spending picture. That includes gifts, celebrations, travel and other seasonal charges.
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Factor in any of your gifts that can help with your immediate needs. For example, all-purpose gift cards can go toward groceries, gas and other essentials to help lower your overhead and get your finances back under control.
2. Reevaluate your budget
Paying off your debt is important, but you need to stay current with your bills too. Before you try to start tackling your holiday debt, look at what's on the horizon and build a budget that helps you meet all your regular expenses, such as housing, groceries and insurance.
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This way, you'll know what's coming into your account, what's going out and how much you have left over to put toward debt payments. A budgeting app can help you identify opportunities to spend more and save less.
3. Create a debt repayment plan
Once you know how much money you have to work with, you can create a strategy for eliminating your debt.
If your balance is relatively low -- say $300 – you may be able to cut your spending over the next three months and pay $100 per month, plus interest, to get there. If your balance is bigger or you don't have enough to chip away at it quickly, consider ways to extend your repayment timeline.
For larger amounts of outstanding debt -- think in the $5,000 to $10,000 range -- a 0% APR balance transfer card can be especially helpful. You'll need to pay a small fee, which is typically 3% of the amount transferred, but you'll be able to pause on any interest charges for an extended period.
4. Free up extra funds
Accelerate your payoff timeline by challenging yourself to cut costs wherever you can. For example, consider a no-spend challenge for one week. Every little bit you can throw at your balances saves you on interest.
5. Don't drain your savings
It can be tempting to put every dollar you have toward your debt, you still need a healthy emergency fund. How much you need varies based on factors such as how much you make each month, how big your family is and how secure your job feels. Whatever your savings goal, balance debt repayment and savings to avoid going into more debt if the worst happens.
6. Brainstorm ways to earn more cash
If you have some extra time, chances are you can make some extra money. From delivering food to dog sitting, there are plenty of ways to boost your income with a side hustle. You could even turn a passion into profit.
7. Don't beat yourself up
Being in debt is never a good feeling, but there's no need to be ashamed. If you spend too much on gifts to give your friends and family a fantastic holiday, it means you're a kind human who wants your loved ones to feel special. Focus instead on paying off your debt and make a plan to avoid debt next holiday.
How to avoid overspending this year
Now is the time to develop a strategy to save what you need to avoid getting out of debt again. Think about how much you spent over the recent holiday season and create a game plan to spend less in 2025.
It's never too early to start saving. The sooner you start, the more money you'll have to work with thanks to the power of compound interest. Some banks, like Ally and SoFi, even have savings accounts you can split into multiple goals so your holiday funds don't get mixed up with money you've earmarked for other things. If you open a high-yield savings account today, you'll give yourself an early gift: the ability to earn more interest all year long.
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