4 Frequent ‘Money Wounds’ That Might Have Caused Holiday Debt — And How To Financially Recover
Written by
Tina Nazerian
Edited by
Zuri Anderson
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This past holiday season, four frequent “money wounds” might have caused Americans to overspend: A survey published in December 2024 by Beyond Finance found that “among 2,000 Americans celebrating the winter holidays,” 76% “experience emotional distress — ‘money wounds’ — triggered by financial pressures.”
The four most common ones? Twenty-six percent of respondents reported struggling with poor self-esteem, 21% said they habitually overspend, 21% indicated feeling ashamed of their previous financial choices, and 20% said they had a lack mentality toward money.
If you overspent during the holidays and are now facing debt, you can start to recover. Michael Neuenschwander, certified financial planner (CFP) and the founder and principal owner of Outlook Wealth Advisors in Houston, explained to GOBankingRates in an interview how to tackle holiday debt.
Determine What You Owe
Neuenschwander said that usually, the first step toward paying off debt is “getting organized.”
“Lay out what you really owe, or if you want to take it further, lay out all your expenses,” he said.
Neuenschwander added that as you examine your different expenses, such as your student loan, mortgage and credit card repayments, you should note how much you owe, what interest rate you’re being charged and what your payment due dates are. You can align the payment due dates with when you know “money’s coming in.” Then, you can estimate how long it will take for you to pay off each debt based on paying a certain amount.
“And then the prioritization comes right behind it,” he said.
Pick Your Debt Repayment Approach
According to Neuenschwander, when you understand “where you stand” debt-wise, you can “focus on what’s going to make the biggest difference” for you.
He explained that there are two approaches to prioritizing debt repayments. You can tackle the debt that’s charging you the most interest first. Or, you can pay off smaller balances first, which can give you “a sense of accomplishment.”
Consider Switching to Cash
As you tackle paying off your debt, you might consider switching your credit cards for cash, Neuenschwander said. Some people, he noted, use a cash-stuffing method where they put money for different spending areas, such as groceries and rent, into different envelopes.
“If you have to physically pull cash out of that envelope and you see it dwindling, or you see there’s less in it, or you’re about to be at zero, that’s a different psychological feeling than just pulling out a credit card and charging it,” Neuenschwander said. “And so because of that, you’re less likely to overspend in the first place.”
Avoid Future Debt and Recognize the Stakes
To prevent future overspending during the holidays and beyond, Neuenschwander recommended creating a budget and spending plan. He pointed to the 50-30-20 rule, which posits that you should put 50% of your income toward your needs, 30% toward your wants and 20% toward your savings.
Buying things in the present moment and paying them off later “feels good, but really comes back to bite” if you don’t pay everything off in time, Neuenschwander said.
But there are also more severe consequences, he stressed.
Debt can hold you back from building an emergency fund. If you have an emergency, such as a car accident or medical issues, you might have to take care of it with a credit card — and you end up “compounding” the problem.
Neuenschwander emphasized that you’re risking your future if “you’re constantly just paying off things from the past.”
Debt can put you “really far behind for your other goals,” he said. It makes it so that you’re “never in the position to make the bigger decisions” in life, such as buying a new car or retiring.
“It’s not just the monetary cost of what the debt costs you,” Neuenschwander explained. “It’s what it prevents you from doing in the long run.”
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