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Accumulating holiday debt is straightforward, yet eliminating it can disrupt your financial plan for several years. Despite this, many Americans appear open to increasing their debt during the festive season. A 2019 survey by CreditCards.com and YouGov Plc revealed that over half of those with credit card debt believe that the holidays justify borrowing money. Notably, 26% of individuals without any debt indicated they might also consider incurring debt for the holiday season in 2019.

As monthly payments start to take a toll on your income, you may find yourself regretting those decisions—though, by that time, the damage is done.

If the holiday season has left you with debt and you’re eager to repay it, consider consolidating your debt and formulating a repayment strategy. Here’s how you can achieve that:

Step 1: Evaluate your financial situation and total your debts

Your initial task in overcoming holiday debt may be the most challenging: assessing your financial obligations clearly. Take time to calculate all your credit card balances and additional debts accrued during the holiday season to determine your total liabilities.

Creating a structured repayment plan will be much smoother if you document your debts, including the interest rates and current balances. Below is a sample of how your list could be formatted:

Step 2: Select a debt consolidation route

After determining your total debt, the next step is to explore the best methods for consolidating and settling your balances. Among various options, two of the most favored forms of debt consolidation are 0% APR credit cards and personal loans.

Balance transfer credit cards

Balance transfer credit cards can offer you 0% APR on balance transfers from other cards for a period ranging from nine months to two years. While these cards often charge a balance transfer fee, typically 3% or 5% of the transferred balance, the potential interest savings can justify the cost if you’re committed to rapidly eliminating your debt.

This option is most beneficial for individuals who can clear their holiday debts quickly since the promotional 0% interest rate lasts only a limited time. After this period, your credit card will revert to a significantly higher variable interest rate.

Personal loans

Personal loans allow you to consolidate your debt at lower fixed interest rates, accompanied by predictable monthly payments and a set repayment duration. While you will incur interest on your total debt during this process, individuals with good credit can secure rates as low as 4.99% APR—far better than the current average credit card APR of over 17%.

Personal loans normally provide repayment terms from one to five years, making them a suitable choice for those with considerable debt needing an extended timeframe for repayment. (See also: 7 Quickest Methods to Bounce Back from Holiday Spending)

Step 3: Choose the ideal repayment strategy

Your selection of a debt consolidation method will depend on several variables—total debt amount, your monthly payment capability, and how long it will take to become debt-free. Using a debt repayment calculator can clarify your options, but you can also perform some straightforward calculations to guide your choices.

If you had $2,394 in debt, here’s a potential repayment strategy using a balance transfer credit card:

Suppose you obtain a card offering 0% APR on new purchases and balance transfers for 15 months, with a variable APR of 14.49% to 25.49% thereafter. If no balance transfer fees apply within the first 60 days, you can transfer your debts without incurring immediate costs upon card approval.

With 15 months at 0% APR, you’d need to budget $159.60 per month to eliminate your holiday debt within this timeframe.

If that monthly amount is unmanageable, a personal loan with a lower fixed rate may be more appropriate. For instance, assuming you take out a personal loan with an interest rate of 4.99% APR and a repayment period of three years, your monthly payment would drop to $72, culminating in a total interest payment of $189 over the loan term.

Step 4: Remain committed

Whatever method of debt consolidation you choose, it is crucial to establish a clear plan and adhere to it. Failing to do so could hinder your ability to reduce your debts and prolong the financial challenges associated with borrowing.

If you find it difficult to allocate as much as possible toward your debts, consider cutting back on expenses temporarily. Cooking more meals at home, implementing a spending freeze, and opting to spend weekends in will help free up additional funds for debt repayment or building a savings cushion.

It’s also essential to avoid accumulating more debt while you’re focused on repayment. Continuing to use credit cards can lead to further debt issues, so consider switching to cash or debit to help curb overspending.