January can sometimes be a very gloomy month. Aside from frigid temperatures and unpredictable weather, another reason this month might not be going so great for you is because of all the spending you did last month.
Overspending during the holidays can really make it difficult on the budget, especially as you try to forge ahead into the new year. The holidays are stressful enough financially and it can be even more challenging if they didn’t go as planned. While you can’t change anything now, you can create a plan to help you bounce back and recover from a blown holiday budget.
Understand How Much You Spent
First, you need to to understand how much damage was done. Look at your holiday spending in totality: how much did you spend and on what? How much of it did you pay for upfront? How much did you charge on credit cards? You want to know exactly how much was spent and in what categories. This will help you devise a plan to tackle debt and also help you plan for next year.
Revise Your Budget
Next, you’ll need to create a solid plan to pay off debts and that starts with revising your budget. You’ll need to cut back in any non-essentials and put cash towards paying off your holiday spending. Be realistic about how much you can put toward payments but also commit to it. Don’t forget that the next holiday season is creeping up with every passing month – you want to be done with paying off this holiday’s spending before then.
Consider Transferring Balances
If you need to, consider transferring balances from a higher-rate card to a lower-rate card. This may help reduce the amount of interest you need to pay. You may be able to get a 0 percent rate on transfer balances for up to 18 months. Be careful and understand the details, as some cards require you to have the balance paid in full after the introductory period. You also typically need good credit to qualify.
Start Planning for Next Year
It’s a good time to start thinking ahead even though you may still be worrying about all the spending you just did. Understanding what went wrong with your holiday budget this year can help you be more proactive once the year end holiday season comes around. Perhaps you need to start saving earlier or maybe you need to lower your gifting budget. Whatever it is, learn from your mistakes so that the next holiday season won’t be as stressful.
It may seem daunting to bounce back from a blown budget, especially during the holidays. However, it’s possible with commitment and focus. It’s a new year and a new opportunity to wipe the slate clean and start fresh.
How did you do on holiday spending these past few months? Do you need to cut back now to make up lost ground?