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How to Recover from Holiday Spending
Thanksgiving, Christmas, and the New Year can put a strain on your finances. It’s easy to rationalize one more gift, one more meal, or one more road trip when you’re already overspending. But, the result is usually a hefty dent on your credit card or your savings.
If you haven’t yet mustered up the strength to look at the financial damage, we’re here to help you face it, fix it, and plan for the future.
Evaluate the Damage
As painful as it may be, it’s time to add up the damage of your holiday spending spree. Create categories such as credit cards, checking, and savings, and tally up how much you spent from each. Be sure to add up all holiday related expenses, including food and travel. Total the amount and set the information aside.
Evaluate Your Budget
Write down your monthly expenses and their corresponding payments. For credit cards and other debt, write down the minimum payment regardless if you usually pay extra. Be sure to include average costs for gas, groceries, grooming, hobbies, and paying yourself. Subtract that amount from your monthly net income.
Pay Off Your Debt
Here’s where you get to play with the numbers. Wherever you took the money from to pay for your holiday fun, it needs to be replenished. Perhaps you were already making extra payments on your student loan or your mortgage. For the next few months, consider shifting the extra payments to pay back your holiday spending. In terms of what you should replenish first, always start with the debt that accrues interest. Once your debt has been satisfied, you can shift your money to other priorities. Automate payments to replenish or payoff what you used.
Plan Ahead
Let’s go back to the amount you spent over the holidays. This is a good indicator of how much you will likely spend next season. Take that figure and divide it by the remaining months in the year. Open a separate savings account and automate a transfer of that amount each month into your savings to be prepared for next year. You can either do this right away or once you’ve repaid your debt from the recent holiday spending.
Source: Bankrate
If you haven’t yet mustered up the strength to look at the financial damage, we’re here to help you face it, fix it, and plan for the future.
Evaluate the Damage
As painful as it may be, it’s time to add up the damage of your holiday spending spree. Create categories such as credit cards, checking, and savings, and tally up how much you spent from each. Be sure to add up all holiday related expenses, including food and travel. Total the amount and set the information aside.
Evaluate Your Budget
Write down your monthly expenses and their corresponding payments. For credit cards and other debt, write down the minimum payment regardless if you usually pay extra. Be sure to include average costs for gas, groceries, grooming, hobbies, and paying yourself. Subtract that amount from your monthly net income.
Pay Off Your Debt
Here’s where you get to play with the numbers. Wherever you took the money from to pay for your holiday fun, it needs to be replenished. Perhaps you were already making extra payments on your student loan or your mortgage. For the next few months, consider shifting the extra payments to pay back your holiday spending. In terms of what you should replenish first, always start with the debt that accrues interest. Once your debt has been satisfied, you can shift your money to other priorities. Automate payments to replenish or payoff what you used.
Plan Ahead
Let’s go back to the amount you spent over the holidays. This is a good indicator of how much you will likely spend next season. Take that figure and divide it by the remaining months in the year. Open a separate savings account and automate a transfer of that amount each month into your savings to be prepared for next year. You can either do this right away or once you’ve repaid your debt from the recent holiday spending.
Source: Bankrate