Often, Ms. Meyer said, people plan well for recurring monthly expenses but stumble when setting aside cash for known but “irregular” expenses, like holiday spending and vacations. She suggested adding up all of those anticipated costs and setting aside a fixed amount for them each pay period to reduce the need to carry a balance on credit cards.
“Think of these things as part of your monthly budget,” she said.
Online budgeting tools can help. Wirecutter, a New York Times affiliate, recommends You Need a Budget.
And rethink your holiday budget if it has become a burden. Relentless marketing pushes people to meet expectations they can’t afford, Mr. O’Brien said, leaving them stressed and in debt.
“It’s a ridiculously expensive season,” he said. “And it wasn’t always this way.” Planning for more reasonable gifts, he said, can help set you up for success next December.
Should I always pay off the card with the highest interest rate first?
Some people may prefer to pay down the costliest balance first, while making minimum payments on the other cards. Then, when the first card is paid off, extra payments are shifted to the card with the next highest interest rate, and so on, until all balances are paid off. This approach can save the most in interest charges.
Others, however, may prefer paying off the card with the smallest balance first, regardless of the interest rate. The idea is that seeing a balance paid off imparts a sense of accomplishment and encourages you to keep on paying off your debt.
“It really depends on what keeps you motivated,” said Madison Block, a spokeswoman for American Consumer Credit Counseling, which advises people on debt reduction.
What if I’m struggling to make minimum card payments?
If you can’t see a realistic way to pay down your debt, you may want to seek advice from a nonprofit credit counseling firm. The firms typically offer free budget counseling and can also help negotiate — for a fee — debt management plans with credit card companies, which will allow you to pay off your debt at a lower interest rate over several years. To find a reputable firm, start by checking the Justice Department’s list of firms authorized to provide mandatory bankruptcy counseling.