Are you feeling the “holiday hangover”?
We’ve packed up our decorations, taken down the lights, and started making checklists for spring cleaning. And for many Americans, there’s one other post-seasonal chore to take care of: budgeting.
Between gifts and garlands, dinners out and decorations, it’s easy to overspend during the holidays. CNBC reported that 78% of Americans spend more than planned between Thanksgiving and Christmas, often in the form of credit card payments. When the new year rolls in, we’ve got a lot to catch up on.
Holiday debt is stressful, but not insurmountable. With careful planning, you can get back on top of your finances – and avoid falling into the same trap next year. Here’s how:
- Tally Your Receipts. Crunching numbers – especially debt payments – isn’t something we look forward to. Don’t be discouraged. Sizing up your finances now will save you money and heartache in the long run.Start by writing down all your holiday charges. Beside each, list the minimum payment, interest rate and due date. Pay your most expensive debts – those with the highest interest rates – first. Credit card debt, which can charge 20% interest or more, will usually take priority.
- Build a Budget. How much are you spending on groceries each month? What about utilities? Insurance? How much is left over, and where does it go? What percentage of your income goes to savings? To debt payments? When?A budget can help you answer these questions and more. List your expenses and schedule debt payments, starting with holiday expenses. Make it your goal to wipe out all your holiday debts by April, and you’ll have a clean slate for the rest of the year.
- Track Your Spending. People who track of their spending do a better job managing it. Consider using a pen and paper, an app or a spreadsheet to write down how much you spend every day. You’ll think more critically about what you are shelling out, how you spend it and when you spend it.Tracking your spending allows you to pinpoint your spending habits. A lot of times people make small expenditures on entertainment, dining, or personal care without realizing the long term cost. If you track your expenses on a daily basis for 30 days, you’ll better understand where your money is going. You will also develop a better mindset around managing your finances including when you spend your money and how you should organize your finances to prevent unnecessary costs.
- Cut Costs. Whittle down nonessential spending – think restaurants, coffee, monthly subscriptions – and then look for ways to save on essentials. Little changes like cooking at home, watching for sales and turning down the AC, or turning off the lights when you’re not at home can save plenty in the long term. Digital banking apps offer 24/7 account access to help you keep track of your finances. For example, regional banks like Axiom Bank’s online checking generally offer hassle free registration and have a full set of online budgeting tools.
- Think Ahead. Don’t make the same mistakes twice: Start planning for next year’s holidays now. Set a spending limit, shop sales for gifts, and set aside a little money each month for travel expenses, holiday meals or expensive presents.
For more on this, here is a great interview with CFP Bobbi Rebell, on how to raise money to pay off your holiday debt.
Disclosure of Material Connection: This article was made possible by Axiom Bank. Savingadvice.com only recommend products or services we believe will add value to our readers. We are disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”
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