10 Steps to Paying Down Holiday Debt

The holiday season can bring a continuing avalanche of unwanted gifts, weight, and debt. Unlike the first two, debt and the associated effects of spending on such things as holiday travel, gifts, a new wardrobe, and décor are difficult to eliminate. But there's no need to fall victim to continued overspending and debt accumulation into the new year. The key to getting back on track: Setting a deadline for recovery -- two months seems reasonable -- and carefully monitoring household money. Follow these 10 tips and pay down holiday-induced debt before spring.

This seems like a no-brainer, but the first step in reducing debt is determining how much there is. Tally up credit card balances, personal loans, and any other monies owed. It will provide insight on how vigorous and extensive debt-reduction efforts have to be.<

Financial planners can help create plans tailored to clients' lifestyles by examining debt, spending habits, and income. Does professional financial advice sound out of reach? It could be free -- some banks offer it to customers as a complimentary service. For instance, Bank of America partners with Merrill Edge to help customers get on track financially.

Debt reduction plans are less effective and successful when they're all in the head. Experts advise writing down a plan that can be looked at, analyzed, and edited. There are plenty of pre-designed guides and templates online to help with budgeting, saving, and repaying debt.

Any extra money from the holidays should be put toward debt immediately. It can be tempting to use end-of-year bonuses, money received as gifts, and work tips to make another purchase; instead, remember that additional money of any sort can quickly and drastically reduce debt.

Before hitting the stores again, ask the bank to put a daily spending limit on your debit cards -- helping replenish a bank account by choking off access to it. If you try a purchase that exceeds the limit, the retailer will reject the transaction; to bypass the decline, the bank must be called for approval, just the type of hassle that can discourage free-spending ways while helping save and pay off debt.

Paying with cash instead of plastic works much like setting a daily spending limit on a debit card. Once the green stuff is gone, the spending is done. (Loading up again at a nearby ATM is cheating, but at least offers a new look at account balances that can reinforce the need to save.) With cash, unlike plastic, shoppers see their stash dwindle with each purchase. Research has shown that shoppers spend less when paying with greenbacks.

With attention off holiday events, the struggle to pay bills becomes more obvious. Put prepaid cards received as gifts toward critical expenses such as a phone bill and put retailer-specific gift cards -- for Target, say -- toward necessities such as groceries or medications. This makes it possible to direct money that would have been used on these items toward paying down debt from the previous months.

Advertised discounts can all too easily seduce people into thinking they need to buy more. To get financials back on track in two short months, resist any and every temptation, including post-holiday sales blaring huge markdowns. Immediately unsubscribe from all marketing and promotional email lists and avoid scanning store fliers. Lack of knowledge about so-called deals is an excellent way to avoid taking the bait.

Perhaps holiday debt still lingers despite having resorted to the previous methods of paying it down. The next step, although it may seem insensitive, is to consider selling some gifts. Debt only deepens as balances roll over each month, and it's vital to have cash to climb out of the hole. Selling those $200 headphones or the $100 purse can help pay down holiday-induced liabilities. If receipts accompanied the gifts, try returning the items to the store for credit or even cash. Use the store credit for something practical and put the money you otherwise would have spent on these necessities toward debt reduction.

Taking a part-time job for just a couple of months is a quick way to help relieve debt overload that accrues with holiday spending. Although the commercial crush slows in January and February, many companies are still hiring seasonal employees. Target and Staples, for example, often need workers to process returns and help with inventory counts and restocking shelves. Retail and seasonal pay typically hovers in minimum-wage territory, but $150 or so every other week will help put finances in order.