First Things First: You’re Not the Only One
If you rolled into January with a maxed-out card, a few buy now pay later instalments and a bank balance that looks a bit sad – you’re not alone.
Recent figures suggest Australians are putting tens of billions of dollars on credit cards over the festive period, and many households take months to recover from Christmas debt. Surveys show the average Aussie spends around the high hundreds on Christmas alone, and a big chunk of us are using credit cards, personal loans and BNPL to fund it.1 Add summer holidays, back-to-school costs and higher living expenses, and it’s easy to see how the numbers blow out.
The important thing now isn’t beating yourself up – it’s putting a simple recovery plan in place so you can get back in control.
Step 1: Face the Numbers (No More Guessing)
Most people know they’ve overspent – but they don’t actually know by how much. That uncertainty is what keeps you awake at night.
Grab your statements and make a quick list of:
- Credit cards – balances, interest rates, minimum repayments.
- Buy now pay later accounts – how much is owing and when instalments are due.
- Other debt – Overdrafts, personal loans or other short-term debts linked to the break.
Write it all down on one page or spreadsheet. This isn’t about shame – it’s about turning a fuzzy worry into something you can actually tackle head on.
Step 2: Build a “Debt Recovery” Budget for the Next 3-6 Months
Next, you want a short, focused budget – not a 20-page life plan. For the next few months:
- List your must-pay essentials: rent/mortgage, food, utilities, transport, insurances.
- List your debt repayments from Step 1.
- See what’s left for everything else.
Then look for temporary cuts so you can redirect cash to debt:
- Streaming services you barely use.
- Takeaway, alcohol and “little treats” that quietly add up.
- Memberships or subscriptions you can pause.
Financial institutions and community banks talk about this a lot: the fastest way to pay down festive debt is usually a mix of trimming spending and redirecting those savings straight at the balance until you’re back on track.
Step 3: Decide How You’ll Attack the Debt
Once you know what you owe and what you can spare each pay, choose a simple strategy to clear it.
Option A: Highest interest first (debt avalanche)
List debts from highest to lowest interest rate. Pay the minimum on everything, then throw any extra at the highest-rate debt first. When that’s gone, move to the next. This usually saves the most interest overall.
Option B: Smallest balance first (debt snowball)
List debts from smallest to largest balance. Pay minimums on all, then aim to knock out the smallest debt first, even if it’s not the most expensive. Once it’s gone, roll that freed-up money onto the next one. This can be more motivating psychologically.
There’s no one right answer – pick the approach you’re more likely to stick with for the next 3-6 months.
Step 4: Talk to Your Lenders Before Things Go Off the Rails
If you can already see trouble coming – missed payments, dishonours, constant juggling – call your lenders before that happens.
Many banks, credit unions and card providers will at least talk to you about options like:
- Short-term hardship arrangements.
- Temporarily reduced repayments.
- Switching to a lower-rate product in some cases.
Community lenders and financial counsellors regularly remind people that reaching out early is far better than waiting for collection calls.
If you’re really overwhelmed, consider calling the National Debt Helpline (1800 007 007) for free, independent support.
Step 5: Avoid Digging the Hole Deeper
While you’re in “debt recovery mode”, try to avoid:
- Using one credit card to pay off another (or withdrawing cash from a card).
- Taking out payday-style loans.
- Adding new buy now pay later accounts on top of what you already owe.
Those quick fixes are exactly what keep people stuck with a Christmas debt hangover well into winter. Media reports and comparison sites regularly warn that interest-bearing credit card debt and BNPL balances can trap households for months if they’re only paying minimums.
When You Genuinely Need Extra Cash Flow
Sometimes, even after trimming your budget and talking to lenders, there’s still a gap – especially if you’re dealing with things like:
- Unexpected car repairs or appliance breakdowns on top of Christmas debt.
- Back-to-school costs hitting at the worst possible time.
- Health or dental bills that can’t be put off.
In those cases, taking on new credit might still be part of the solution – but it needs to be done carefully and with a clear plan.
Quick cash loans vs a clear, structured loan
If you’re searching for quick cash loans in a panic, that’s a sign to slow down and look at options that are actually designed to be repaid, not just rolled over. Our guide on preparing for quick cash loans explains what lenders look for and how to put yourself in a stronger position.
Emergency loans for short-term shocks
For genuine one-off shocks – like urgent bills or a temporary income dip – a straightforward emergency loans product can be a better option than juggling multiple cards and BNPL accounts. The idea is to:
- Borrow only what you need.
- Have a defined repayment schedule you can afford.
- Use the loan as part of a broader recovery plan, not a licence to keep overspending.
Medical loans when health bills collide with holiday debt
If you’ve been hit with health or dental costs on top of festive spending, a specific medical loans option may help you spread the cost without turning to payday lenders. Again, the key is to make sure:
- The repayments fit comfortably within your revised budget.
- You fully understand the interest rate, fees and total cost of the loan.
- You’re not borrowing more than you reasonably need.
And as always, it’s worth reading our Warning About Borrowing page before taking on any new credit while you’re already under pressure.
Step 6: Set a Short-Term Goal – Then a Longer-Term One
Big numbers can feel impossible. Break them down into concrete targets, for example:
- Short term (next 90 days): Clear one smaller debt, or knock your main card down below a certain balance.
- Medium term (6-12 months): Have all “Christmas 202X” debt fully repaid.
Write those goals somewhere you’ll see them – fridge, notes app, whiteboard. Every time you make a repayment, you’re ticking down towards something specific, not just feeding a bottomless pit.
Step 7: Make Next Christmas a Different Story
Once you’re on the way back to zero, it’s worth doing a quick debrief while the pain is still fresh:
- How much did you actually spend this Christmas and New Year?
- What would you like that number to be next time?
- What are 2-3 things you’ll do differently?
Our earlier guide on how to save money over Christmas walks through practical ways to plan early, shrink the gift list, and set up a dedicated Christmas savings pot so you’re not relying on the card every December.
Final Thoughts: Be Kind to Yourself, Firm With Your Plan
Feeling a bit of regret after a big Christmas is normal. The important part is what you do now:
- Get the full picture of what you owe.
- Build a simple, realistic recovery budget.
- Choose a repayment strategy and stick to it.
- Seek help early if you’re struggling – from your lender or a free financial counsellor.
- Only consider new products like emergency loans or medical loans as part of a careful, thought-through plan.
You can’t change what you spent in December, but you can control what happens over the next few months. Future you will be very glad you did.
