The packages have been opened. The kids are loving their new toys. You are enjoying your coffee one morning and reading your mail when you see them…
THE BILLS! Yikes!
It seems you went a little over your budget. It was fun and the joy you brought to your kids’ faces was worth it.
However, now you need to find a way to recover from overspending during the holidays. It is not fun, but is necessary. Here are nine steps you can take to recover from any spending mistakes you made during the holiday shopping season.
1. Put the credit cards on ice – literally
The first thing you need to do is stop spending. You need to put the credit cards away. Take them out of your wallet and put them in the safe.
Or, if you want to make sure you really do not use them – freeze them in a block of ice! That way, if you do feel the pull to shop, it will take time to thaw out and the urge to spend my pass by then.
2. Calculate the damage
You can’t bury your head in the sand when it comes to seeing the damage done to your budget. Face it head-on.
Total every receipt and credit card statement to find how much was spent. While it may be painful to see the balance due, it is necessary.
When you see that figure in writing, it helps you know what you are facing and where you may need to cut back.
3. Review the budget
Once you know the amount you need to pay off you also need to review (or create) your monthly budget. That means including those new monthly payments to the credit card companies.
Make sure your budget is balanced, in that you are not spending more than you take in each month.
4. Create a repayment plan
Up next, you have to create an exit strategy – which will be to pay off those credit card bills. Grab the statements for each and then list them by including the balance and the interest rate.
You may be tempted to pay the highest balance first (which is what I recommend when it comess to getting out of debt). However, when it comes to this debt you just incurred, I recommend starting with the highest interest rate first.
By eliminating that bill quickly, you are reducing the amount of interest you will pay to the credit card company. There is no need to pay them any more than you need to!
Once the first card is paid in full, roll the monthly payment amount into the payment for the next card. Repeat until they are all paid in full.
You’ll not only pay them off quickly but also minimize the total interest paid as well!
5. Reduce your spending
When you have bills to pay it means you need look at the budget to find areas where you can cut back.
It may mean cutting cable or eliminating dining out. You may need to cancel the subscription to the gym or find frugal date night options.
Be willing to make short-term sacrifices for long-term gains as the sooner you can eliminate these bills, the better.
6. Use your bonuses
If you are fortunate enough to get a holiday bonus don’t blow it on what you want. Use that to pay off your holiday bills.
If you don’t get a bonus then use any of that Christmas cash you received for your bills! Look ahead to see if any other money will be coming your way such as birthday money or a tax refund. Earmark that to pay off your holiday spending.
7. Get a side-hustle
If you need to tackle your balances then a side-hustle may be the solution – even if temporary. Look around the house for items to sell. If you are a teacher, consider tutoring students.
Every penny earned can be money used to put towards that holiday spending.
8. Build your savings
You don’t want to find yourself in this same situation again next year. It is not a fun cycle of rinse and repeat.
The holidays come at the same time each year. It is not a surprise or an unplanned expense. You need to plan for it.
Review the total spent this year and divide that by 12. Focus on saving that amount each month, all year long, and you’ll be able to pay CASH next year and not even use the credit cards.
9. Save using the coin challenge
One simple way to save money for holiday shopping is to switch to a cash budget. Then, save the change and any “leftover” money each pay period.
For example, if you budget $300 for groceries and spend only $270, don’t blow that left-over $30…put it back for the holidays!
The same premise works with change. If the total is $7.49, hand over $8 and put $0.51 into your savings jar.
Saving doesn’t have to be hard
Simple tricks can help you quickly build your savings!
It is easy to spend too much during the holidays but with some smart strategies, you can get your budget back on track.
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