Seven Ways Retirees Can Crush Holiday Debt in the New Year
Racked up debt spoiling loved ones? Now’s the time to get a handle on it with these seven debt-busting moves.


We’ve all been there: buyer's remorse after a season of frenzied spending and often overspending. That joy of gift giving quickly turns to panic when you receive your year-end credit card statement. If this sounds familiar you aren’t alone. Of shoppers polled by LendingTree, 36% said they racked up debt this holiday season, spending an average of $1,181 per person.
Starting the new year with extra credit card debt, especially if you are in retirement, isn’t ideal. After all, it can negatively impact your cash flow and if left unchecked, quickly gets out of hand, especially if you are only paying the minimum. But it doesn’t have to keep you down, says Bruce McClary, a spokesman for the National Foundation of Credit Counseling. There are strategies that McClary says should work to put a dent in those holiday excesses.
“The first step is to look closely at your budget to see where you stand. Look at all your expenses, how much debt, how much income and how you might manage it,” says McClary. “You may feel a little in over your head, but maybe it's just a matter of taking a look around.”

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Eyes wide open couldn't be truer when it comes to working off your holiday debt. Armed with a true idea of your debt you can get busy reducing it. Here’s how.
How to get out of holiday debt
1. Seek greener pastures. If you racked up high-interest debt, one easy way to reduce it is to lower your interest rate via a balance transfer. Credit card companies want your business and will go to great lengths to get it. They entice you with sign-on bonuses and zero interest balance transfers. Many credit issuers offer no-interest periods for up to 21 months, says Andrea Woroch, a money coach. “During this period, your entire payment goes towards reducing the actual balance and nothing is wasted on interest fees,” she says. “Just make sure you compare balance transfer cards to find the best option with the longest no-interest term.”
2. Tap savings to pay it down. This is a last resort option when the matter has become urgent, says McClary. “If you feel like you're at risk of falling behind, you’ll get hit with penalties and interest rates, the balance is growing and you're at threat of debt collection, then it may make sense to use some of your savings” to pay down the debt, he says. “Keep in mind when you do that you are chipping away at your future income during retirement.”
3. Lower your expenses. If you are on a fixed income one way to shore up extra cash to pay off your debt is to curb your monthly expenses. To do that first make a list of every expense. After that, identify areas you can cut. You can also save money by shopping around for new insurance, cable and phone coverage. You may be able to get better rates. The more you cut, the sooner you can pay down your debt. “Start by cancelling unused subscriptions and switch to a lower-tiered data plan or move to an online-only wireless carrier that offers plans designed specifically for seniors,” says Woroch.
4. Boost your retirement cash flow. If you want to pay your holiday debt fast, consider getting a part-time job, side hustle or selling unwanted belongings to earn money. You can consult if you have a skill, pet sit, work in retail or even become an Uber driver. Any extra cash you earn can go toward your debt.
5. Don’t leave money on the table. If you are 55 or older, many retailers and service providers have a senior discount that can save you up to 10%. Don’t be afraid to ask for that discount. You can also save money by asking for better rates and taking advantage of coupons and discounts. Even unplugging unused devices can save you money on your energy bill. The idea is to find a place where you can save money that can go to your debt.
6. Contact your creditors. As soon as you realize you are in trouble, contact your credit card companies and alert them to your situation. Many are willing to work with you and can offer you repayment options. Before you contact your creditor, have a clear idea of how much you owe and what you can afford to pay. Ask the creditor if there is a forbearance program, if you can make fewer payments or if your interest can be reduced.
7. Seek help. If all else fails and you’re still struggling to pay off your debt, seek help from a nonprofit credit counselling agency, says Howard Dvorkin, CPA and Chairman of Debt.com. They will be able to give you a free, in-depth debt analysis over the phone and identify the debt-busting program best for your situation. That could range from debt management to debt settlement to even bankruptcy. “Best of all, there's no obligation. You can hang up and walk away with that debt analysis, which can help you figure out your next steps,” Dworkin said. "I've been a debt counselor for three decades now, and retirement debt is one of the saddest situations I see. There's simply no time for any other solution except hiring a professional to help.”
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Donna Fuscaldo is the retirement writer at Kiplinger.com. A writer and editor focused on retirement savings, planning, travel and lifestyle, Donna brings over two decades of experience working with publications including AARP, The Wall Street Journal, Forbes, Investopedia and HerMoney.
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