How to Recover From Holiday Overspending
'Tis the season for holiday gifting! 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 spending and get you back on financial track so you can start the new year strong.
7 Tips to Get Control of Your Finances After Holiday Overspending
Putting your budget back where it belongs can seem daunting after overspending during the holidays, especially if you dipped into savings to complete that shopping list. The best way to replenish those funds after purchasing gifts is to start small and keep steady, so use these tips to put yourself back in the black after your festive shopping.
1. Skip the post-holiday sales
The last thing you want to do if you've already exceeded your budget is shop some more. Avoid online shopping and other Black Friday deals that arrive in your inbox. Turn off Cyber Monday alerts and avoid ad-heavy social media. Recovering from an exceeded budget is possible — but every dollar counts — so keep your eye on the prize and avoid buying things that aren’t in your budget.
2. Take a closer look at your spending
Some people successfully reach financial goals using mobile apps that track 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 meal-prepping lunches, brewing coffee at home and cutting back on ordering in.
3. 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 should go toward your debts.
On the other hand, using emergency funds from your 401(k) or IRA is probably not worth the penalty you'll pay. Pros warn against using retirement funds unless you have no other choice.
4. Come up with a pay-off plan
One way to pay off debt is to pay as much as you can — a comfortable amount of money each month — toward the account with the highest interest rate while making the minimum payments on other debts.
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 progress will speed up. Here are more ways to lower your personal debt.
5. Revamp your personal finances 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 internet service provider to negotiate better rates if competitors are offering lower-priced deals.
6. Save money for next year
Once you've made progress on your financial recovery, set up a savings account to start putting away funds for next year's holiday season. Any extra money — even $10 a week — can help take the sting out of the all-at-once gift-buying pain.
Similarly, if you get a raise at work or land some other cash windfall, sock away those extra funds. Lastly, think about ways to bring in extra income, whether it's selling old items online or picking up some side projects.
7. Get crafty with your gifts
Ready the colored pens and pencils. Get the scissors and construction paper out. It’s time to get crafty and make some DIY holiday gifts for friends and family — no matter the size of your living space. Creating fun, unique gifts is one of the easiest ways to spread seasonal joy while keeping a close eye on your holiday budget.
Plus, homemade gifts are often those most cherished. 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.
Learn more about how to keep your budget in check with our tips and techniques for managing your money.