If you overspent during the holidays this year, you’re not alone. According to a survey, 36% of consumers went into debt during the holidays, owing up to an average of $1,249. Regardless of how much you owe, there are steps you can take to help recover your finances after the holidays are over. Here’s what we recommend for building your finances back up after an expensive holiday season.
Assess Your Finances
The first thing you’ll want to do is assess your overall financial situation. This includes fully understanding your monthly budget and determining your short and long-term financial goals. Then create a spreadsheet of your expenses, debts, payment due dates, and interest rates. If you’re new to budgeting, our make a budget worksheet is a great place to start.
Cut Unnecessary Expenses
Once you’ve fully mapped out your budget, you should have a better understanding of where you spend your money most. You’ll likely notice there are expenses from products or services that you don’t need or even use. When paying off debt or building savings, it’s best to trim down your expenses as much as you can. For example, you can cancel any underused subscriptions that you might have forgotten about. You can also try cutting back on frivolous expenses like dining out, Starbucks coffee, or delivery services. If the purchase is for something non-essential, see if you can find a less expensive version or cut it from your budget entirely.
Evaluate Credit Card Usage
Take an inventory of all the credit cards you’re using and evaluate if they have any rewards or annual fees. If you’re using cards with high fees or you’re carrying debt across multiple accounts, consider consolidating your debt with a balance transfer to a low-rate credit card. This way you can pay down your balance without the extra interest. It’s also recommended you find room in your budget to pay more than the minimum monthly payment. This will not only help you pay down the debt faster but will help your credit score, too.
Start Planning For Next Year
It’s never too early to start planning for the year ahead. Start by putting away $50 a month toward holiday gifts for the end of the year. Before you know it, you’ll have enough funds to cover gifts for your family and friends. Make a list of the people you’re buying gifts for now, and potential ideas to see how much you’ll need to save up for. Some items will likely be cheaper to buy out of season, which will help with your overall holiday budget for next year.
Whether you need assistance with debt repayment, creating a budget, or even opening an account, First Financial can help! Visit one of our branch locations or contact us to speak with a representative today.