Between gift shopping, party supplies, and groceries, there’s no getting around it: the holiday season is one of the most expensive times of the year. Even worse, if you’re not careful, you can end up starting the New Year mired in debt. We’ve all been there before, but is there a simple way to get over a post-holiday spending hangover? It’s really not as hard as you might think. Here’s 5 simple steps that’ll get your finances back on track in no time.
The first step to paying down holiday debt is to temporarily freeze all your spending except for necessities like food, rent and other monthly bills. That means no eating out, no new clothes and no extraneous spending until your debt is paid off. This spending freeze will provide a clear break between where the extravagance of the holidays ends and normal life resumes. It also helps to quickly put a stop to any bad spending habits you’ve developed.
The next step is to get an accurate picture of where your money has been going. There are several money tracking apps to help you do this, but you can do it by hand if you choose. One of the dangers of the holiday season is getting caught up in the spirit of the season, and when you are not living in the moment, it is easy to overspend and lose track of where your money is going. That’s why it’s important to get a clear picture of your spending habits.
Even the most basic of budgets has places where it can be tightened. When trying to pay down debt, it is essential to trim the fat from your spending. One of the most obvious places to start is with your entertainment budget, which can include cancelling cable, switching to a more affordable mobile plan and limiting or eliminating going to the movies. Another area to trim is your food budget, which could mean more home cooking and buying in bulk. Basically, anything that is not a necessity is on the table when it comes to cutting your monthly overhead. Start with the things you know you won’t miss and take it from there.
Now that you know where your money has been going and reduced your expenses, it’s time to start paying down your debts and make a plan for where you want to be financially in the coming year. Outline your priorities for the short-term and estimate how long it will take you to reach them. Having a plan is more important than people realize because it provides a tangible map to achieving your financial goals.
It doesn’t matter if you are paying off credit card debt or are using auto title loans to cover an emergency expense. The principle of getting your financial house in order are pretty much the same. As the old saying goes, nothing changes if nothing changes. The start of a new year is a symbolic fresh start, and what better way to begin 2018 than with a clear plan for financial stability?.
The end game to all of this is to begin planning for the future. Once you have some stability in your finances, you can begin saving for the future. When you are young, the concept of eventually growing older, starting a family, purchasing a home and hopefully enjoying a long and happy retirement seem a long way off. The reality is, the years can pass you by in the blink of an eye if you’re not vigilant, so use this new year before you to start saving for your future.