Now that the festivities have ended, what seemed like harmless indulgence in holiday spirit now feels frivolous and overwhelming. Sure, you knew all that holiday spending might have consequences, but ... wow. The budget got stretched a little far. Getting rid of debt from holiday spending may not be as easy as taking down decorations, but these tips can help you get your budget back on track and start the new year strong.
Know where you stand.
Go ahead, just do it. Open that bill. Pull up your banking app. It might sting at first, but you need to know exactly how far you strayed from your budget. Once you assess the damage, you can start making a smart and intentional plan about how to work your way back.
BOGO! 20% off! $10 back for every $100 spent! After-holiday sales might seem too good to miss, but spending money on unnecessary purchases will only put you further away from your goal. Ignore the sales (for now) and put the money you would have spent toward reducing your holiday debt.
Stick to your schedule.
Resist the temptation to ignore an overwhelming bill that's due. Missing payments can hurt your credit and may lead to higher interest costs. If you can, commit to getting current and staying current on your bills. It may leave you with little spending money now, but you’ll thank yourself later.
Avoid using your emergency fund.
Experts recommend keeping six to eight months of living expenses on hand to help you afford urgent and unexpected events, like job loss or medical issues, without going into debt. Dipping into your emergency fund to help you cover holiday splurging may seem like an easy way out, but it could put you in a difficult spot in the future. If you do end up using your emergency fund, try to replenish it as soon as you can.
Be proud of your efforts.
Budgets are most effective when they’re a team effort. Let friends and family know that you’re reining in your spending and focusing on saving for a while. They can help support you and make plans that are more in line with your budget goals.
Learn from your mistakes.
You can’t change the past, but you can learn from it. Keep these lessons in mind during the big spending seasons in the coming year. Consider starting a “holiday fund” now by putting $10-$20 a week into a special savings account.
Find more ways to get your new year on track and off to a strong start.
By Brooke Howell, GM Financial
Brooke Howell loves digging up new ways to improve money management and make smarter financial decisions. She has four pit bulls and a Chihuahua and volunteers with animal rescue groups, so she knows the importance of making every cent count and setting yourself up for financial success (as well as the value of a really good vacuum).