From buying gifts to entertaining to taking advantage of Boxing Day sales, there are a lot of opportunities to spend more than you budgeted for over the holidays. That means that many people are starting off 2016 with a holiday hangover in the form of credit card debt.
But getting back on track and ensuring you never find yourself in the same situation can be easy if you follow these four easy steps:
1: Assess the Damage
You might not want to add up all of the bills to see how badly you overspent, but it’s important that you do. If you still have your receipts, you might even consider taking some things back which could help you reduce the debt you owe.
If you only overspent by a small amount, it might be easy to adjust your budget to make up for those extra expenses.
If, however, you overspent a lot you’ll probably have to sit down and figure out how you’ll repay the money. As you do this, think about what expenses were necessary and which could have been avoided. This will help you be more conscious of what you spend next year.
Also read: Debt Resolutions – Canadians Want to Pay if Off>
2: Make a Plan
Once you know how much you overspent and how much debt you’ll have to pay off, it’s time to figure out how you’re going to pay it off. Break it down based on how much you can reasonably pay off every month.
Look at your budget to see where there might be some wiggle room. You might decide to eat out less in January or to take the bus and save on parking and gas. You can then use that extra money to put towards paying off your holiday debts.
You should also consider transferring some of the debt from your high interest credit card to a line of credit if you have one. This will make paying it off faster and easier since you won’t also be paying off high interest charges.
Also read: How to Target High-Risk Debt>
3: Bring In More Money to Compensate
If you want to pay off your debt faster, or if adjusting your budget isn’t enough to get you out of debt, then consider taking on some extra work in order to earn a little more money.
While there might be some opportunities at your job to pick up extra shifts, you might consider helping out your friends or neighbours by babysitting, tutoring, or shovelling snow.
Also read: 7 Ways to Earn Extra Cash for the Holidays>
4: Budget For Next Year
No one likes to overspend and then have to scrimp and save in order to pay off debt. The best way to ensure that this doesn’t happen again next year is to look at what you spent this year and budget to spend around the same amount next year. That amount will likely take into account the last minute gifts you’ll have to buy for those times when someone buys you something when you didn’t expect it and the Boxing Day deals you can’t pass up. While you might not spend the full amount, you’ll have a cushion of savings to help get you through the season.
After you pay off your holiday debt from this year, consider putting a certain amount aside each month to help you cover your extra holiday costs for next year. If you can’t do that – you could get an extra job before the holidays. Taking on extra work and saving up will save you from the stress and interest charges of carrying credit card debt.
Finally, consider what areas you can save money on next year. While it can feel like there is a lot of pressure to spend money over the holidays, we forget that it’s the thought that counts and not how much money that you spend. There are ways to save money on everything from Christmas dinner to Hanukkah sweets. Look for sales next year and cut out doing things that aren’t crucial to your enjoyment of the holiday. Making things from scratch and shopping year round when you see a good deal can potentially help you save.