The more we think about saving money the more we end up spending on something or the other. Especially during the festive season or during holidays your budget is definitely going to crash no matter how hard you try not to. No matter how disciplined you are, it’s easy to get so distracted that your budget escapes your mind. Sometimes, overspending strikes without us even realizing it. Other times, you get so caught up in an event or a moment that you actively choose to forget your money goals.
Here are some ways to recover from your holiday debt and get your budget back on track:
1. Check the damage
When it comes to bills, the last thing you want is a surprise. If you have a feeling that you may have splurged more than you expected, you are better off knowing what’s coming, so you can prepare. If you paid anything with cash, get all your receipts together and add them up. With a credit card, you can log onto the card’s website or download the app to get your current balance. Combine all of your credit card balances and cash receipts to see what your total bills will be for your holiday spending. Be sure to include your normal monthly spending along with your extra holiday spending so that you have a complete picture of what you owe.
2. Stop spending frivolously
While it may sound simple, an important step is to curtail unnecessary spending. Put yourself on a financial diet and try not to spend money on non-essential items until you catch up on any extra debt you incurred during the holidays. Using coupons and comparison shopping for essential items and cutting extra expenses, can really make a big a difference in your monthly budget. In fact, simple lifestyle changes can help you save thousands of dollars over the course of year.
3. Select a payment strategy that works for you
Consider paying down the credit cards with the highest interest rates first. If that seems too daunting, try paying down your smallest balance first so you can see your progress toward eliminating your bills right away. Pay more than the minimum payments, if you can, but most importantly – always pay on time.
4. Plan for next year
As you work to pay off your holiday spending, make sure to take note of how you got here. If you didn’t make a budget, and your bills are a surprise, make a budget and track you’re spending this year. If you realize you were too generous, spending money on extravagances you can’t afford, commit to making a list of gifts that are within your price range. Make a budget and stick to it. If you know you won’t be able to pass up on the deals and sales during the holiday season, it is never too early to start saving for next year.
5. Go on a Plastic Diet
If you relied heavily on your credit cards during the holidays, it may be a good idea to go on a plastic diet now that the season is over. Stick to cash only. Research has continually shown that people spend more when they use credit cards than when they use cash; the convenience makes it easier to overspend. Parting with tangible cash makes you think more about your purchases.
6. Brainstorm Ways to Increase Your Income
If the holidays really wrecked your finances, you might need to take on a second job or side hustle. That’s not too realistic, though, if you’re already working 40 or 50 hours a week. Luckily, there’s more than one way to earn extra money. Hosting a garage sale or selling your unwanted items online might give you the income boost you need. Plus, keep in mind that tax season is approaching. Getting organized and filing your taxes early means you’ll receive your tax refund earlier.
7. Make a repayment plan
Having a budget is one of the best ways to save money and get a handle on your spending. Plus, it can help you focus your money to reach goals and pay down debt. Finding the right balance between your income and your spending is key. Once you have your total for your holiday spending, you’ll know if you have the savings and income to pay the bills when they come due. When building your repayment plan, focus on credit cards and loans first to avoid paying interest. If you have to take cash from an emergency fund, make it a priority to get that fund back to a healthy balance. If you can’t pay it all down at once, set aside as much of your income as possible every month to apply to the balances due.
If you’ve spent more than you can afford, an easy way to recover is to make some returns. The presents we buy ourselves are usually the easiest to return. We have the receipts, and there won’t be any hurt feelings. If that’s not an option, you can try returning gifts that you received for cash or store credits. Apply the cash to your holiday spending bills and use the store credits for necessities that you would need to buy anyway. You can even try selling your gifts for cash on sites such as eBay to earn back some money.
9. Start shopping early
By shopping early, you will absorb the cost of holiday gifts throughout the year rather than all at once. Your bills will be easier to pay off and you will keep your credit card balances low, yet they will remain active throughout the year – all of which are good ways to strengthen your credit score.
10. Don’t buy big ticket items without a plan to pay them off
Even if that big screen TV you’ve always wanted is finally on sale, don’t take it home without knowing whether or not it fits into your budget or without having a plan to pay it off. Determine how you can make adjustments and sacrifices in other parts of your budget to help pay for it. Make sure you know how long it will take to pay it off and what funds you will use to pay for any large expenses.
These are some basic tips and tricks that will definitely help you recover from the expenses and also put some credits in your savings for future convenience.