Once again, the holidays are here; a time make merry, reunite with family, revive some lost connections, and spend!
Many people return from the holidays to high and unexpected credit card bills. A recent survey by the CNBC revealed that 74% of Americans come back to accrued debts of more than $1000 at the start of each year. Quite a few people can settle these debts immediately. For some people, paying off holiday debts could go up to Easter and beyond. Imagine that.
This is why it is crucial to come up with a plan to save for the holidays. They say failing to plan is planning to fail. When it comes to holiday spending, this saying inevitably hits close to home.
How Can You Save for the Holidays?
The most effective way to save for the holidays is by figuring out how much you’ll need, then creating an appropriate budget. You can then begin to put aside some money each month in preparation for your holiday spending.
If your December holiday budget is $1200, and you wish to save from August, you can put aside about $300 per month. The earlier you begin saving for the holidays, the more prepared you will be for the spending that comes with it.
By having a budget, you will avoid the unnecessary expenses and exercise control over your money instead of allowing it to control you. While everyone around you will be nursing a holiday debt hangover long after the Christmas trees have been put away, you will be twirling in bliss like the holidays were never here.
How Can You Avoid Holiday Debt?
Don’t get caught up in the widespread belief that overspending during the holidays is inevitable. There are many ways of ensuring you spend according to your budget.
One way to avoid holiday debt is by opening a holiday spending account. Mixing up your holiday money with household money or money meant for other things could be a sure way of losing track of how much you spend. Opening a separate holiday account will keep you in check and help you stay on budget as planned.
Using a spending log during the holiday will help you track your spending. Expenses can add up real quick, and before you realize it, you might run out of your holiday savings and begin tapping into credit. Remember, gifts and Christmas decorations aren’t the only things affecting your budget. Uber trips, social functions, and even charity events may take up a chunk of your holiday savings. A spending log will keep you in check and help you steer away from debt.
How to Recover Financially After the Holidays?
Even with excellent planning and remarkable financial intelligence, the holidays are an easy time to get off track with your spending. Maybe you just wanted to have a happy time after a rough year, or you became frivolous. Whatever your reasons, the consequences of throwing caution into the air during the holidays usually sets in at the start of the year, and suddenly the overindulgence ceases to be all fun and merry. The good news is, you can always recover if you purpose too.
Assess Your Financial Situation
The first step to recovery is by examining your overall financial situation, including your financial goals and monthly budget. Write down all your debts, interest rates, payment deadlines, and come up with a realistic time frame to service the debts keeping in mind all your financial plans and goals.
Go on a Strict Money Diet
Going on a money diet is another way to financial recovery after the holidays. You can decide to cut out all unnecessary expenses and reduce the amount you usually spend every month. Instead of going for expensive cafeteria meals during lunch break, you can carry to work a low-cost home-prepared meal until you are back on track.
You can also explore the option of saving the money you usually spend on entertainment and channeling it towards your financial recovery. After a month or two, your money diet will put a smile on your face.
Take a Credit Card Break
After the holidays, you might realize just how much you may have overstretched your credit card. As a step towards financial recovery, you will need to give your credit cards a break. Instead of adding onto already accumulating credit, you can choose to go the cash or debit way until you are done paying the accrued holiday debts.
While it is essential to treat yourself during the holiday season, you have to be careful not to run into debts that will take you several months to settle. Don’t let the holiday creep up on you. Plan for it long before it sets it. Also, keep in mind that the fun will continue long after the holidays are over. This way, you will be in control of your spending, and chances of you running into debt will be almost negligible.
“Nothing stops that holiday feeling like a debt you can’t repay.” Stay in control.