Money Smarts Blog
4 Ways to Get Your Budget Back After the Holidays
Dec 13, 2021 || IHMVCU
If holiday spending left you dreading your upcoming statements, you’re not alone. According to a survey conducted by American Research Group Inc., Americans plan to spend an average of $835 this year on gifts this holiday season alone. Add in the cost of family dinners, decorations and other holiday events and your average American household is spending well over $1,000 during the holiday season.
If you’re one of the many Americans who plan to make all their holiday purchases with a credit card, or you just totally overshot your budget, you may find yourself carrying a mountain of new debt into the New Year.
Here are some suggestions to get your budget back on track before the temperatures start rising again.
Know what you spent. Don’t be surprised by your bill in January. Save your receipts from any holiday-related credit card purchases and immediately make a mental subtraction from your checking account. You’ll know what to expect when the holidays are over, and you’ll have enough to pay for it.
Make a repayment resolution. Many Americans add holiday purchases to existing credit card debt. If this sounds like you, separate the total you spent on holiday purchases and make a plan to pay off that amount by the end of the first quarter of the year. You’ll be back to making pre-holiday payments by April.
Limit your spending. While you're working to pay down that holiday spending, try and limit your credit card usage. Use cash when you can. It's a lot harder to part with cash than just simply swiping your card. Also, try not to fall prey to all of the "post-holiday" markdowns that many retailers put out.
Save your bonus. While it can be tempting to use that year-end bonus or money you got as holiday gifts to just pay off your credit card debt, it’s probably only a temporary solution. According to Nancy Anderson, a financial planner and Forbes.com contributor, it’s often better to develop a realistic repayment plan and save your hard-earned bonus to prevent the same debt-accumulation problem in the coming year. To find out if this is the best plan for you, read her article “When Not to Pay off Your High-Interest Credit Card Debt.”
For more help rebooting your budget, check out our easy savings, debt and budget calculators at ihmvcu.org/calculator. See what it will take to pay off your debt, calculate your household cash flow or even see the impact of setting a savings goal.