Paying off your Christmas debt

As those endless emails and social media ads sharing the best ever deals for Christmas gifts and Boxing Day sales start to dry up, our inbox can start to be flooded by late payment reminders and credit card statements we’d rather not open. The January and February reminders of Christmas overspend, summer holidays that blew the budget and back to school expenses can all start piling up in the new year and feel overwhelming.

An article a few years back provided some staggering facts around New Zealand Christmas and summer holiday spending:

  • One in every four adults went into debt to pay for Christmas in 2018,
  • Younger adults, aged 18 to 34 years were the most likely to go into debt,
  • Older adults, aged 55 to 64 years were the least likely to go into debt,
  • Three in every 100 people were still paying off their Christmas debt 11 months later.

Kiwi consumers continue to experience high inflation and interest rates and an uncertain economic outlook in 2024. Much like recent Christmases, Kiwis should reconsider high spending December and January when essential items are costing us more. Meanwhile, Centrix Credit Bureau noted consumer arrears for personal and vehicle loans, and credit cards also continued to climb, and is up 6.1% year on year.

Paying off Christmas debt

Two key strategies to tackle your holiday debt

If one of your New Year’s resolutions was to pay off your Christmas debt quickly, Sorted provides a couple of useful strategies to get your debt under control. There are pros and cons to each method, and they will suit different personal circumstances. 

First things first though, you’ll need to understand how much debt you have and what type of debt you have. Is it high or low interest debt? Large or small repayments? Long term or short term debt? Low or no interest debt shouldn’t be your key focus, so put aside your mortgage or student loan repayments for the time being. Instead, make a list of the credit cards, store cards, car loans and payday loans you have that are more likely to have a high interest rate and significant repayments.

Read on to understand which debt repayment strategy will work best for your situation. When it comes to managing money, we all think differently. These strategies suit people with multiple debts to repay.

  1. Debt Snowball

To put things simply, this strategy encourages you to repay your smallest debt first. Starting small and seeing the results of your efforts (paying off and closing one debt at a time) can be rewarding and encourage you to keep up your debt repayment habits. Continue paying minimum repayments to all your debts, but focus any additional income into paying off that smallest debt first.

The downside is that you may not be repaying your highest interest debt first so this strategy could cost you more in interest in the long term. You need to understand if you’d prefer to pay less interest or keep up your motivation for debt repayment success.

  1. Debt Avalanche

This strategy is more financially savvy as you will focus on repaying your highest interest debt first. It will be the cheapest and quickest way to get out of debt. 

For some people, directing spare cash into their highest interest and sometimes largest debt first doesn’t stop the overwhelm. They may still feel like they have an impossible number of debts and don’t feel like they’re making progress. In this scenario, people can lose motivation for debt repayment and reduce payments or give up on their strategy. If you suspect this could be you, then the Debt Snowball could be a better strategy to employ. 

Eight ways to pay off Christmas debt faster

We take a look at some useful ways to tackle your holiday debt early in the year. It’s time to get creative.

  1. Review your budget

Just how much money do you have coming in and going out each month? Is there any leftover cash that could be redirected to paying down Christmas debt? A detailed budget will show you where you might be able to trim expenses to free up some more money, or have a think about how you could increase your income – a side hustle, selling unwanted or unused Christmas gifts or household items and so on. 

  1. Decide on your debt strategy

Debt Snowball or Debt Avalanche? What method will work best for you? Perhaps it’s a mix of both – Debt Snowball for the first few months for some ‘quick wins’, then switch to the Debt Avalanche for some focused debt repayment.

  1. Automate your repayments

A great tip is to set up automatic repayments for each of your debts. Even better, arrange these for soon after payday so you can be assured you’ll have money in your account to pay these. Don’t leave it to chance that you’ll remember to manually pay your debt obligations. This is where people can get caught up in a cycle of late payment fees and unnecessary charges.

  1. Negotiate lower interest rates

In the instance of a credit card, it pays to keep an eye on good deals in case you can transfer your balance to a lower interest rate credit card. This can provide some useful short term savings while you focus on debt repayment.

  1. Pay more than your minimum repayment

If you’re able to, pay more than your minimum repayment obligations. Rounding up to the nearest 10 or 100 can be a huge help to paying your debt off more quickly.

  1. Use windfalls wisely

From time to time we all strike it lucky with an unexpected windfall. A cash Christmas gift, work bonus, Lotto win or tax refund can all bump up our bank accounts. Rather than treating yourself to something special, why not use it to reduce your debt and become debt-free even faster? It could make you feel better than the short-term dopamine hit you get from that clothing purchase!

  1. Debt consolidation loan

If you do have multiple debts, it could be worthwhile for you to consider a debt consolidation loan. If your current debt interest rates are high enough, you may find you save money by moving multiple debts to a single, lower interest rate loan. You’ll not only save on interest, but you’ll save on the time and energy it takes to monitor and administer multiple loans. For some people, debt consolidation loans are significantly easier to manage – one single payment every week, fortnight or month. 

  1.  Personal finance advice

If you’re struggling with making a budget or repaying debt, there are free money management services available ( and personal finance advisers (paid services). These services can be incredibly helpful to help you form a plan to get on top of your debt, and help you create better financial habits in the future.

How much can you borrow with a personal loan? 

With Nectar Money you can borrow unsecured up to $30,000, or as little as $2,000. Use our loan repayment calculator to find out how much you could get. We offer debt consolidation loans to simplify multiple debt repayments, and emergency or urgent  loans to meet your cash flow needs.

Getting started with Nectar Money

Do you need a great rate on a personal loan? We’d love to help with your personal loan requirements. Find out how much you could borrow and learn more about our personal loans. You can get started with Nectar Money and get a personalised loan quote online which will include your interest rate, maximum borrowing amount and repayment options. Borrow better, faster today!*

*Nectar Money’s lending criteria and responsible lending checks apply.