5 Steps to Recover from Increased Holiday Spending

Why holiday spending feels so heavy after the new year

Typically, the beginning of the year feels harsher than the end-of-year holidays because December spending happens in a rush, while bills arrive on schedule. The National Retail Foundation’s holiday survey found consumers planned to spend about $890 per person in 2025 across gifts, food, decorations, and seasonal items. (National Retail Federation, 2025). When a big share of extras lands in one season, a tighter month afterward is the natural result.

Common sources of holiday debt

With the current economic strain, consumers are turning to debt during the holidays. According to a 2025 LendingTree survey, 37% of consumers took on holiday debt, averaging $1,223. (Davis, 2025). Most post-holiday debt isn’t from a single splurge. Instead, it’s many small, reasonable choices that add up: travel, hosting, tips, gifts, and last-minute fixes.

The stress part is real

Money stress from holiday spending can hit your mood fast and is prevalent. Notably, Bankrate reported that 43% of U.S. adults said money negatively affects their mental health, including stress (Gillespie,2025). Don't let this derail your financial plans. Treat the next 60 to 90 days as holiday spending recovery time. Utilize this focused stretch to give your money extra attention, so the rest of the year feels lighter.

Step 1 — Get a clear picture of where you stand

The first step in recovery is to get a clear understanding of your finances because it reduces anxiety. When you know the facts, you can make better decisions. Start with a snapshot of your post-holiday debt and your monthly cash flow.

List balances, APRs, minimums, and due dates

Write down every balance (credit cards, Buy Now Pay Later plans, loans), the APR, the minimum, and the due date. If a promo rate is ending soon, note that date too. If you cannot find the APR, it’s usually listed on your statement near the interest charge calculation. If the minimum payment isn’t obvious, look for “minimum payment due” on the first page.

Add up your total post-holiday debt

Adding up your post-holiday debt might feel uncomfortable, but it’s important because your plan will focus on this number. If it feels like too much, total one category at a time. Start with cards, then Buy Now Pay Later plans, then everything else. Make sure your final total is correct.

Spot cash-flow pressure points

Next, check the timing of your payments to identify pressure points. Are several payments due in the same week, or right before rent is due? These pinch points can lead to late fees or overdrafts. You can fix this by moving due dates, setting reminders, or scheduling payments a few days early.

Before and after snapshot table

A snapshot reminds you that this is a temporary incline, not your usual. Copy this format and swap in your numbers:

 Quick checklist:

• Gather statements or screenshots
• Write balances, APRs, minimums, and due dates
• Total everything
• Mark any payments due in the same week

Step 2 — Reset your budget for reality, not perfection

A recovery budget is meant to be temporary and realistic. You’re creating room for debt payments and a small buffer without making life miserable. This means your holiday spending recovery should be manageable.

Update your budget with current payments

Rewrite your budget considering your current situation. If you need a quick refresher on how to budget, start there. Next, list essentials first (housing, utilities, groceries, transportation) and plug in your updated minimum payments. If your pay comes in biweekly, try building your budget around each paycheck instead of the whole month. That makes it easier to cover essentials first, then schedule debt payments and transfers.

To accelerate debt repayment, choose 2 discretionary areas to pause for 30 to 60 days. Common picks are takeout, subscriptions, impulse shopping, or rideshares. Remember, you’re not banning fun; you’re redirecting money on purpose.

Use a budget calculator to rebalance

To see the tradeoffs quickly, try a budget calculator. Enter your numbers, then test one change at a time, for instance, saving $200 by reducing dining out.

Before and after budget example

Here’s a simplified monthly example showing how small shifts create space for payments and savings so you can quickly catch up and not fall further behind.

Step 3 — Create a focused debt paydown plan

Having a plan helps you move from feeling stressed to knowing your next steps. Choose one method, pick one target, and keep things simple. That’s how you shrink your post-holiday debt.

Choose a payoff method you’ll stick with

The Consumer Financial Protection Bureau (CFPB) explains there are 2 common strategies: the highest-interest method and the snowball method (CFPB, 2019). If motivation is your challenge, the snowball approach is the best choice. If interest costs worry you most, start with the debt with the highest annual percentage rate (APR).

Map a timeline

Use a debt payoff calculator to see how payment changes affect the finish line. Even $25 to $50 extra per month can shorten the timeline. Quick example: a $1,800 balance at a 22% APR paid at $115 per month could take around 19 months to payoff. Adding an extra $35 and raising the payment to $150 per month can shorten the payoff by 5 months. Small increases matter.

Consider debt consolidation

If you have accumulated numerous debts during the holidays, consolidation may be the answer. It can help if it reduces your rate, simplifies payments, and fits your cash flow. But before combining debts, compare fees and total interest to confirm savings. Also, try not to let your balances grow again after consolidating.

Set a monthly target and automate it

To pay down debt quickly, pick a minimum monthly target you can hit for 60 to 90 days, then automate payments. Additionally, put any money you save from cutting back on non-essentials to extra payments.

Step 4 — Put guardrails in place for next year

Guardrails aren’t restrictions; they’re protections. A few systems now can prevent a repeat cycle next holiday season. Instead of holiday spending recovery becoming your new normal, plan and set aside funds as you’re able throughout the year.

Create holiday sinking funds

Set up simple sinking funds for gifts, travel, hosting, and holiday extras, and start contributing to them. Saving monthly might feel boring, but you’ll be thankful when it shields you from credit card stress next January.

Start a savings plan for your holiday budget

A holiday budget is simply a commitment to your future self: next January won’t be a surprise. If you save $50 per month from February through December, you’ll have $550 ready. Pair that with a realistic holiday budget, and you’re set for the festive season.

Set spending limits

A few months before the season starts decide your total caps on gifting, travel and hosting. Write it down. Then do one mid-season check-in to stay on track. Additionally, reflect on what drove overspending this season. Was it pressure to keep up, last-minute plans, or emotional spending? Name the trigger, then match it to one guardrail, such as a 24-hour pause rule, list-only gifting, or cart limits.

Real recovery story and coaching insight

Sydney owed about $1,900 across 2 cards and Buy Now Pay Later after the holidays. She paused 2 subscriptions, cooked more at home, and redirected $200 per month to debt. Within 3 months, debt balances dropped, and her stress eased because the plan was working.

Coaching insight

The pressure to indulge in impulsive spending during the holidays is hard to escape. It’s all over social media and might come from friends and family. That’s why education and planning matter. Start learning about budgeting and begin laying the foundation now for a successful 2026 holiday season.

FAQs

How long does it take to recover from holiday debt?

Many people feel relief within 60 to 90 days once they follow a recovery budget. Full payoff depends on balances, rates, and cash flow. A debt payoff calculator can map a realistic timeline.

Should I use savings to pay off holiday spending?

No, if you drain your savings completely, one unexpected expense can push you back into debt. However, if you have a significant savings cushion, keep a small buffer ($500 to $1,000) and put the rest toward post-holiday debt.

Is consolidating holiday debt a good idea?

It can help if it lowers your interest rate and fits your monthly budget. Compare fees and total cost, and avoid taking on new balances after consolidating.

How do I avoid holiday overspending next year?

First, start sinking funds for gifts, travel, and other holiday expenses early in the year and contribute monthly. Then, during the season, set spending caps and follow a holiday budget. Lastly, have a mid-season check-in to prevent regret.

How can your credit union help after the holidays?

Your credit union can offer consolidation loans, education, tools such as a budget calculator, savings products, and guidance on repayment options suited to your situation. If consolidation is on the table, your credit union has transparent solutions and can help you compare options and understand the full cost.

Citations

National Retail Federation. (2025, October 16). Consumers to spend second-highest amount on record, according to NRF holiday survey. NRF. https://nrf.com/media-center/press-releases/consumers-to-spend-second-highest-amount-on-record-according-to-nrf-holiday-survey

Davis, M. (2025, December 22). Holiday debt hits $1,223 as tariffs push 45% of Americans to cut back on gifts. LendingTree. https://www.lendingtree.com/credit-cards/study/holiday-debt-tariffs/

Gillespie, L. (2025, April 30). Survey: 43% of Americans say money is negatively impacting their mental health. Bankrate. https://www.bankrate.com/banking/money-and-mental-health-survey/

Consumer Financial Protection Bureau. (2019, July 16). How to reduce your debt. Consumerfinance.gov. https://www.consumerfinance.gov/about-us/blog/how-reduce-your-debt/

Board of Governors of the Federal Reserve System. (2025, May). Report on the Economic Well-Being of U.S. Households in 2024 - May 2025. Federal Reserve. https://www.federalreserve.gov/publications/2025-economic-well-being-of-us-households-in-2024-savings-and-investments.htm#:~:text=Some%20financial%20challenges%2C%20such%20as,of%2059%20percent%20in%202021.