5 expert-backed ways to start the New Year with less debt, and more breathing room

Debt payoff tips 2026: Debt has a way of creeping into daily life, quietly stretching budgets and making long-term goals feel harder to reach and financial advisers say January offers a natural reset point, a chance to change habits early in the year so progress can build month by month.

Even modest adjustments can make a difference by the time the year winds down. Financial planners shared five realistic steps that can help people start the New Year feeling more in control of their money, as per a report.

Experts urge reviewing credit reports before starting a debt plan

Before making a debt plan, experts recommend understanding exactly what you owe. Melissa Cox, a certified financial planner at Future-Focused Wealth in Dallas pointed out that reviewing your credit report is a crucial step, as per a Yahoo Finance report.


Cox said, “You can’t fix what you don’t know, and catching errors early can save you thousands," as quoted by Yahoo Finance.

Checking your report can uncover accounts you forgot about, incorrect balances, or bills that may have slipped into collections.

Cox advises, “Confirm every account is accurate, especially if you’ve changed lenders, moved, or consolidated,” as quoted by Yahoo Finance. Fixing errors won’t erase real balances, but it can improve your credit score and help reduce future interest costs.

Also read: Intel stock rises today after Nvidia buys 214 million INTC shares in $5 billion deal

Tracking spending reveals hidden habits that slow debt payoff

Many people underestimate how much they spend until they start tracking it. Joe Conroy, a CFP and owner of Harford Retirement Planners in Maryland, said that, “It will naturally change your spending habits because you know you’ll have to track it somewhere,” as quoted by Yahoo Finance.

Tracking highlights patterns, such as unused subscriptions or frequent dining out, and helps ensure extra dollars go toward debt instead of disappearing unnoticed. Conroy said that, “When you don’t track what you spend, you always spend more than you think you do,” as quoted by Yahoo Finance.

Automating payments helps maintain consistency and protect credit

Automatic payments can help keep debt repayment moving forward, even during busy months. Automation reduces the risk of late payments and protects credit scores.

Cox said, “Automation ensures the basics are covered,” adding, “Then, layer in extra payments manually when you can be intentional and focused,” as quoted by Yahoo Finance.

Also read: 10 big brand lawsuit settlements expire in December — see if you can still claim cash

Financial planners recommend realistic budgeting frameworks

Experts often reference the 50/30/20 rule as a starting point, with 20% of income going toward savings or debt repayment. Those focused on eliminating debt may direct that full amount toward balances, while others may split it between saving and paying down debt. The approach, planners say, should fit each person’s situation.

Letting go of past mistakes can improve long-term debt progress

Negative thoughts about past financial decisions can slow progress. Nate Baim, a CFP and founding member of Pursuit Planning and Investments in Portland, said, “I see too many folks dwelling on the past, which often stops them from consistently working to reduce their debt and increase their savings,” as quoted by Yahoo Finance.

Instead, he encourages focusing on small wins, such as paying off a smaller balance or using credit card points to reduce debt. Baim said, “These easy and early wins can help you shift from feeling overwhelmed to feeling empowered,” as quoted by Yahoo Finance.

Short-term spending freezes can free up cash quickly

A brief spending freeze can create quick breathing room. Cox suggests temporarily cutting non-essential expenses like eating out or impulse shopping and redirecting that money toward high-interest debt.

Cox said, “Sometimes, we just need a lifestyle reset to remind ourselves what we actually value versus what’s become automatic spending,” as quoted by Yahoo Finance.

During the freeze, essentials like housing, groceries and transportation continue as usual, while discretionary spending pauses. Even a short freeze at the start of the year can free up meaningful cash and help reset habits before spending resumes more intentionally.

FAQs

How can checking a credit report help with debt?

It can uncover forgotten accounts, incorrect balances, or collections that may be hurting your credit score.

Why does tracking spending matter so much?

Experts say people often spend more than they realize, and tracking helps expose habits like unused subscriptions or frequent dining out.