The holidays can bring loads of joy and cheer—but also added debt. Many people use credit cards to finance their holiday purchases, only to face high balances of credit card debt come January. The new year is the perfect time to reflect and make a debt repayment plan and raise your game to stay debt-free in the future.

How to beat back debt in the new year

The good news is there are proven steps you can take and tools you can use to start the year off on the right financial footing. Let’s start with your strategy:

  1. Assess your debt. Take inventory of all your credit card debts: Log into each account and note the balance, minimum payment, due date and interest rate for each. (You’ll reference these in a second.) Take a moment to understand that the interest rates will be applied to your remaining balances every month—making it bigger and bigger—until you pay the debt off.                                                                                                                                                                                                              
  2. Review your budget. Evaluate your monthly income and expenses to get a clear picture of your finances. (For MFS customers with Statement Savings Accounts, the built-in money management tools make this step a lot easier.) Categorize your spending to identify nonessential areas where you can cut back—think dining out, taking Ubers over public transit, etc. All these little niceties are holding your money hostage. This is where you’re going to free up the cash you need to tackle your debt faster.                                                                                                                                                                                                                                                                           
  3. Strategize your debt repayment. Prioritize high-interest debts first but pay attention to due dates. For all your credit card statements, regardless of interest rate, be sure to pay at least the minimum balance by the due date to avoid late fees and further damage to your credit score. This part might feel overwhelming, especially when you realize how high the interest rates are. Trust the process: Make whatever payments you possibly can, even if they’re small, and you will eventually gain momentum and catch up.                                                                                                                                                                                                                                                                                                                                                                                                                            
  4. Stop using credit cards. In this recovery phase, make things easier for yourself: Avoid adding more to your credit card debt. Focus on using cash or debit cards and resist the temptation to use credit cards for your purchases. After enjoying the high of the holiday season, a break from using your credit cards is also a terrific way to reset your finances and bring your actual financial capacity into perspective.

 

Training to become debt-free

Many people set fitness goals and join a gym in the new year. You can also apply that mentality to your finances. If you want to train yourself to become an even more diligent saver, consider opening a Vault Savings Account. You can easily transfer money into this type of account, but to withdraw it, you must come in person to an MFS branch. This added step provides extra security to help ensure your savings stay in place, preventing impulse spending and helping you build financial mindfulness.

With the right strategy, effective tools and a positive outlook, you can solidify your approach to debt in 2025 and set a speedy course to a debt-free future.


This content is for informational purposes only and is not intended to be personal financial advice.