As you pack your Christmas decorations back in their cabinet, the money that you’ve blown away during the holidays is now finally sinking in. The mere thought of looking into your credit card account balance may even petrify you. If it’s any consolation, you are not alone in your predicament.
The holiday spending hangover is ranked as the number one problem by most people at the start of a New Year according to a study made by LearnVest, an online seller of personal finance software.
Here are some ways to help you recover from your holiday spending:
1. Put your plastic on hiatus.
The first thing to do is to put a stop on your credit card spending. Your bills as well as the interests will keep on piling up if you will continue using your credit card. A hiatus means to pause – pause just until you pay it in full. Use cash for your purchases instead.
2. Assess your situation.
One thing is for sure, you cannot leave your bills unopened. You will have to face them sooner or later (although later is a bad idea because once your bills become overdue you will find yourself facing unwanted late charges). Instead, gather all statements and receipts related to your holiday purchases. Sum them all up. Then arrange them from the highest to the lowest interest rates. Prioritise and settle all those that charge higher interests rates first. Take note of all payment due dates.
3. Set up a payment plan.
Once you have a figure in mind on how much you are supposed to pay off, the next thing to do is to set up a payment plan. The best option is to pay the amount in full. Although it is the best solution, it is not always viable. So instead, come up with a goal or a target date on when you want to fully pay your holiday spending. Once you have a definite goal, you need to have a smaller goal each month. Pay the maximum amount that you can on a monthly basis and calculate how long will it take you to fully pay the bills.
4. Trim your budget.
To speed up your progress, you need to limit your spending at least until all your holiday overspending has been paid off. There are various ways to reduce your monthly expenses.
Aside from trimming your expenses, this is also the best time to start using a monthly budget (if you haven’t started yet).
5. Sell items that you don’t need anymore.
The start of the year is also a good time to start cleaning your closet or your house for that matter. Get rid of items that you no longer need and sell them. The proceeds can be use to pay your holiday bills. By doing so, you not only earn extra cash but you also get to declutter your home and remove stress.