It’s not just the waistline that risks getting bigger during the holidays; many of us will face the new year with a much larger debt load thanks to some overenthusiastic credit card spending. There are not many among us who can resist the lure of buying that perfect gift for friends and family (and a few for ourselves if we’re honest).
Sadly, once the glow of the holidays wears off, more often than not, you’re left with a very un-merry balance-owing! Here are some ways you can recover from overspending and prevent it from happening again next year.
Pay Off the Right Card First
The first step is to take a look at which of your credit cards has the highest interest rate and pay those off first. It’s also vital to pay as much over the minimum payment as you comfortably can so you’re not just paying down the interest. If you have a new credit card with a low APR or –better yet—and introductory rate of 0%, transfer your debt to that card if possible (keeping transfer charges in mind).
Analyze What Went Wrong
Did you hit the malls without a firm list of what to buy and for whom? Did you get caught up in sales that actually led you to spend — rather than save — more? Knowing what missteps you took is the best way to make sure you don’t make them again.
Avoiding looking at your credit card bills as they start to come in is not actually a viable solution to tackling credit card debt. There’s a lot of truth to the familiar saying that forewarned is forearmed. Analyse and write down where you might have gone wrong.
Start Next Years’ Holiday Budget Now
Oh, the dreaded “B” word! While it may seem early, now (while you’re still really feeling the sting of overspending) is a great time to outline a holiday budget for next year.
Write down exactly how much you can afford to spend. Consider having money taken from your account automatically every month and deposited into a separate holiday account. That way you won’t even have to think about saving for the holidays — everything will be done for you.
Also, take a look and see if there is anyone you can take off your list by giving them something other than a bought gift, such as a home-made dinner or baby sitting services.
Cut Small Corners
Now’s the really hard part…make a budget not just for the holidays but for NOW. Study how you normally spend money on a day-to-day basis and see where you can make cuts now so you can make significant inroads in your debt repayment plans.
Plan to give up your morning Starbucks for a month or two and commit to only eating meals at home for awhile. Things like bringing a bagged lunch to work can really add up to lots of saved dollars you didn’t even notice you were spending. It might be hard to stick with at first but once your debt owing moves down towards zero, you’ll feel like your struggles were worth it.
Next year when you’re making your shopping list, remember to include a debt-free January as a gift to yourself. It’s a wonderful feeling not to begin a new year drowning in debt.