The holiday meals are long digested and the presents seem like a distant memory when your January monthly bills and credit card statements come flooding in and break you out of a post-holiday stupor. If you succumbed to a buying high last month in a rush to make the season merry and bright, some budget triage is probably in order right about now.
If holiday shopping sent your family’s monthly budget into a tailspin, here are 10 tips to help you quickly get back on track for the New Year.
1. Assess the Damage
Now’s the time to take an honest look at how far off course you veered during the holiday buying frenzy. Adding up exactly how much you spent on gifts and entertainment may be unpleasant, but doing so makes your spending spree a reality. While sobering, the actual figure of your budget deficit will give you the facts in terms of how much you have to pay off, as well as put you in a determined state of mind for getting back on track.
2. Get Organized
Chances are that in the rush of the holiday season, your financial house got a little (or a lot) disorganized. Clutter can be dangerous to your finances, as it leads to the misplacement of important financial items like bills. Forgetting about payments due can lead to expensive late charges that will sink you even deeper into debt. Filing all of your financial paperwork in a physical or online budget organizer will help ensure that nothing is forgotten.
3. Devise a Pay-off Plan
Paying off credit card balances that resulted from holiday spending should be on the top of to-do your list. The Federal Reserve, which has a great deal to do with directing the US economy, recently reported the likelihood of interest rates rising in 2015. Interest charges on your credit cards may threaten to cripple your chances of getting ahead financially in the New Year.
Figure out how much you need to pay per month to resolve your credit card balance within the next 90 days, if possible. Paying the balance off by the end of the first quarter gives you three more quarters to save for the rest of the year.
4. Do Some Financial Belt Tightening
In order to get caught up and pay off holiday debt, it may be necessary to go on an immediate financial diet. Review your spending and for the foreseeable future, cut out 80 to 90 percent of unnecessary expenses. This might seem drastic, but remind yourself that you did more than your share of spending last month, and the sooner you get back on track and slim down your financial bloat, the more likely you’ll have a financially healthy and prosperous New Year.
Some effective methods for cutting out discretionary spending for the next month or so include leaving your credit card at home and using only cash or a debit card, opting for low-cost or no-cost entertainment options and keeping yourself occupied and productive by tackling projects that you’ve been putting off at home or work.
5. Earn Extra Cash
If your holiday shortfall is substantial and budgeting and belt-tightening isn’t enough to get you out of debt in a reasonable period of time, consider bringing in some additional income. A wide variety of options exist for making extra cash, such as doing online surveys, testing products, setting up and writing a blog, dog walking, mystery shopping, selling your craft creations on sites like Etsy.com and tutoring. You can find more options on our page with a list of side hustle options.
6. Sell or Return Unwanted Presents
Chances are that some of your well-meaning friends and family gave you at least a couple of presents that you don’t want or need. Return or sell these gifts and put the money toward your holiday debt. Many stores will give you cashback if you have a gift receipt. If you don’t, they’ll often give you store credit in the form of a gift card. You can resell the gift card and others you don’t want online for cash. You can also sell items online at e-retailers like Amazon Marketplace, eBay and Craigslist.
7. Team Up For Support
Just as you would seek support for a New Year’s exercise and diet plan, team up with a budget buddy to keep you on track. There is a good chance that a friend or family member also overspent during the holidays and wants to get out of the red as soon as possible. Having someone to call gives you a sounding board when budgeting gets challenging. You can compare progress with one another and follow financial blogs that offer helpful advice. Agree to talk at least a couple of times a week, which will help ensure that you both stay within your budgets and pay off your holiday debt.
8. Devise a Gift Spending Plan
The holidays aren’t the only time you’ll be tempted to spend on gifts. Birthdays and occasions like Valentine’s Day may cause a knee-jerk reaction to overspending, so it’s important to be aware of that fact and be ready. Avoid making the same mistakes you made last month by devising a spending plan of action ahead of time. Budget your gift buying purchases and shop ahead of time in order to get the best deals.
9. Don’t Forget Your Emergency Fund
A holiday deficit is no excuse for not having an emergency fund. If you think a rainy day fund can wait until you’re out of debt, consider how you got into debt in the first place. If you had savings to draw from, you’d be in the black right now. A good way to contribute to an emergency savings fund while you’re paying off holiday debt is to save a small amount via an automatic savings plan. Saving even 2-4 percent of gross income each month until holiday debt is paid off will give you operating funds if the need for extra cash arises.
10. Avoid a Repeat Performance
Planning ahead so you start off next year in the black, takes making some financial moves now to avoid the deficit. Start saving so that you have a holiday nest egg to use this December. Determine how much you need to save on a monthly basis by adding up what you spent last year and dividing by eleven.
Suffering from a holiday spending hangover happens to the best of us. Rather than kicking yourself for overspending, stay positive and stick to these get-out-of-debt tactics, and you’ll soon find yourself well on your way to a prosperous new year.
If you are facing an overwhelming amount of debt, a debt relief firm may be able to help you settle it for less than you owe. Compare your options and find a debt relief firm using our comparison page.