Some people come away from the holidays worried about the turkey weight they’ve put on. They’re the ones who promise to eat right and move more at the start of the New Year. But if your overindulgences weren’t to be found around the family dinner table, your resolutions take on a different focus. Rather than a brand-new set of love handles, the attention of your New Year ire is in that towering pile of credit card bills and those urgent messages crowding your inbox.No diet will help beat your holiday debt, but a promise to spend less and save more will. It’s a common piece of advice that’s not always easy to put into practice. If your New Year’s resolution to fix your finances is off to a rough start, check out these simple tips to undo your holiday spending.
Learn the importance of a budget
Forget about the credit cards in your wallet, the type of savings account in your name, or the cash in your piggy bank. The single most important financial tool is your budget. It helps you conceptualize where your money is coming and going. Once you’ve tabled your income and various expenses, you’ll have a better idea about your financial capabilities. At the start of the holiday, this document can help you determine where your limits are. After the holidays, it can help you find where you’re spending your money thoughtlessly.
If you aren’t sure how to make an effective budget, check out this list of money management apps. It contains convenient apps that start budgeting for you as soon as you download them to your phone. Or, if you prefer to go analog, you can always use Excel or old-fashioned paper.
Use your budget to root out unhealthy spending habits
You know buying your children that Xbox One X for Christmas was a bad financial choice, despite how happy it made them. Those large purchases are easy scapegoats, but they’re not always the true reason behind your limited funds. Smaller purchases that you barely think about before making have a bigger impact than you realize once you add them together.
Buying things you don’t need ruins your chances of paying back your holiday debt, so spend time rooting out those unhealthy spending habits. Buying takeout when you have a fridge full of food, Starbucks instead of brewing coffee at home, and new clothes when there’s no room in your closet are just some of the ways you’re wasting your money.
Cutting them out all at once can be hard to stomach, especially if you’re used to spending your money whenever something catches your eye. Try focusing on one type of useless purchase, like takeout, and get used to making your own meals. Then move through the list until you’ve eliminated most of your unnecessary purchases.
Redirect your money towards your debt
If you’re like most Americans, you’ll find several kinds of purchases that you can cut out of your budget. Once you’ve eliminated them as habits, you’ll have more cash to pay off your debts. Redirect this newfound money towards your credit card payments and any other line of credit or cash loan you used during the holidays. Make sure you’re paying the minimum payments for each of your accounts at the appropriate deadlines.
Consider finding extra streams of cash
In some cases, there are no purchases to eliminate, or they’re not enough to cover your debts. When you can’t cut down your expenses, you have to think about increasing your income. In a world of freelancing and side gigs, it’s easier now than ever to boost your income. You can monetize a hobby or skill and sell your services online using websites like Guru, Etsy, Upwork, or Fiverr. There you’ll find work as a designer, writer, or even an accountant, and you’ll be able to pick the fee you charge. You’ll also be able to choose when you work and for how long, so it doesn’t interfere with your full-time job.
Alternatively, you can always pick up a second job work nights and weekends at a local shop or restaurant.It’s not glamorous by any means, but it’s better than missing payments on your credit cards and small-dollar loans.
Stop using plastic
Your credit cards are why you were in this mess in the first place. You need to stop relying on them when making unnecessary purchases. And yes, though it may have made their Christmas, the new Galaxy Note 8 for your partner is an unnecessary purchase. Don’t compound your debt by continuing to use them. Take your credit cards out of your wallet, and try using just your debit card or cash when buying groceries and other necessary purchases.
Don’t stop once your debts are paid off
Though it would be easy to fall back into old habits once your debt is paid off, you shouldn’t. There’s a lesson to be learned here. Like so many others, you only arrived in 2018 buried in debt because you weren’t thinking about how you spend your money throughout the year. Thoughtless purchases and poor planning mean you’re unprepared for the expenses of the holidays.
Make this the last time you finish the holidays in debt. Use the methods above to help pay off bills first, then use them to set aside savings so you can start the new year without a credit card balance in 2019. Cut out unnecessary spending in June and set aside the cash towards a holiday fund, so once the season of Black Friday sales, Cyber Monday deals, and last-minute door crashers comes around again, you’re better prepared for their cost. With enough planning, you won’t be carrying around the weight of your overspending ever again.