Excessive holiday spending can drain a person’s savings. Going into debt with high-interest credit cards to fund holiday spending can make matters much worse. It can take months or even much longer to recover from holiday overspending. It can cause you to fall behind on monthly bills and even run short of money for regular living expenses. Of course, that’s not the way to have a happy new year. So, here are some simple money management tips from Money 4 You, to help you recover from holiday spending and get your finances back in order as soon as possible
Evaluate Your Financial Position
The first thing you’ll need to do in your plan to get out of holiday debt is to assess your current financial situation. Then, you’ll be ready to make a monthly budget to control your spending. So, for a clear picture of your finances, add your income, other monetary resources, and your debts, and then add your debts and regular living expenses:
- Work income
- Other income
- Your total monthly income
- Your payday schedule
- How much savings do you have
- Checking account balance
- Savings account balance
- 401K account balance
- Lines of credit
- Credit cards available funds
- Store credit cards
Debts and Expenses
- How many credit cards do you use
- Credit card balances due
- Your credit card interest rates
- Monthly debt payments
- Utility and other monthly bills
- Your total monthly expenses
- Spending habits for your lifestyle
- Planned purchases coming up
- Grocery budget
- Child’s school and other expenses
- Pet expenses
- Fuel for car, auto maintenance
- Goal date(s) for paying holiday debt
Contrast the total of your monthly income to the total of your total expenses. Figuring out how much current income you have monthly and how much is going out can help you understand what you need to do in your new budgeting strategies. That will allow you to prepare a budget and resolve to stay within its boundaries over the coming months.
Don’t let stress and anxiety about money interfere with your plans. Just make your budget recovery plan and then stick with it until you work your way through the catch-up period.
Make a Plan for Repaying Holiday Debt
Now you have a clear picture of how much you need to pay to recover from holiday overspending. To understand how to improve your finances, commit to your budget. Calculate how much money you can use each month to pay it, and make a repayment plan to pay down or eliminate your remaining holiday debt.
Be realistic. Limit your plan to what can actually fit into your monthly budget. Keep in mind that it’s okay if it’s going to take some months to pay off the holiday debt. However you budget it, the important thing is to set up a plan that will help you financially overall.
Adjust Your Routine Spending
In the calmer weeks and months of spending following the big annual holiday shopping season, it may seem too hard to break the rhythm of spending so freely. But, this is the time to make a sound adjustment to your money management habits. So, focus, stop shopping, train your mind to control your spending, and prevent your debt balances on credit cards from continuing to increase.
Use a Short Term Installment Loan to Reduce Monthly Payments
One financial tool that can sometimes help consumers get back on track is to apply for an installment loan to help pay off bills and cover living expenses. Although it may seem like taking on another payment can’t possibly help, it’s a good way for many people to access the money needed to reduce their total of monthly payments — and help build credit.
A small installment loan is often a much cheaper and more practical alternative to using high-interest credit cards to try to get out of debt after the holidays. It can mean a much smaller total of monthly payments and more reasonable interest than lingering high-interest credit card debt.