How to Recover From Holiday Overspending
'Tis the season for generous giving! But if you went a little overboard showering your loved ones with holiday cheer, now might be the time to be more charitable toward your bank account. We've got the perfect solutions to trim post-holiday bills and get you back on financial track, so you can start the new year strong.
Skip the post-holiday sales. The last thing you want to do if you've already exceeded your budget is more shopping. Avoid malls and other retailers so you don’t get enticed by discounts. Recovering from an exceeded budget is possible but every dollar counts, so keep your eye on the prize and avoid buying things you don't need.
Take a closer look at your spending. Some people have success using apps that track their spending while others use old-fashioned spreadsheets or adopt a cash-only lifestyle. Figure out which method works best for you and make a commitment to stick with it. Once you see where each dollar is going, you can find the leaks and plug them up. Try brown-bagging lunches, brewing coffee at home, and cutting back on entertainment. You won't believe how much money you'll save.
Tap into the right resources. If you have large credit card bills coming your way and need to borrow some cash, a savings account can be a good place to start. Just try to replenish what you borrow as soon as you're back on your feet. If you're fortunate enough to get a tax refund or holiday bonus, that can also help cut down what you owe. On the other hand, using funds from your 401(k) is probably not worth the penalty you'll pay, and experts warn against using retirement funds unless you have no other choice.
Come up with a payoff plan. One popular approach is to pay as much as you can toward the bill with the highest interest rate while making the minimum payments on other bills. Once that first account is paid off, you can repeat the process with the next highest interest rate bill on your list. As your balances go down, you'll pay less in interest and your pay-off progress will speed up. Here are more ways to lower your personal debt.
Revamp your budget for the new year. Now that the busy holiday season has calmed down, you'll have time to look at your bills to figure out how to lower them. Perhaps there are services you're paying for that you no longer use, like a premium cable package or gym membership. You can also call your cell phone and utility companies to negotiate better rates if competitors are offering tempting deals.
Start saving for next year. Once you've made progress on your recovery, set up a savings account to start putting away funds for next year's holiday season. Even $10 a week can help take the sting out of the all-at-once gift-buying. Similarly, if you get a raise at work or some other cash windfall, sock away that extra amount. Lastly, think about ways to bring in extra income, whether it's selling old items online or picking up some side projects.
Your holiday shopping may be complete, but there's one more gift left to get, and this one’s to you: the gift of a healthy budget. By trying these tips you can make a quick recovery from the holidays and start the new year off on the right financial footing.
Related Topics: Saving Money