Welcome to 2016!
As 2015 came to an end, you might have blown your budget right out of the water, or thrown it away all together. With Christmas gifts, holiday sales and other revelry, even the most conscientious spender likely spent over their budget.
Now it’s 2016. Christmas trees have been packed away (mostly!) and new year resolutions have already been broken. Your bank and credit card statements begin to trickle in, and the damage you inflicted becomes horribly clear.
To add insult to injury, you now have a migraine-like headache. You are experiencing a financial hangover!
I don’t have a surefire financial hangover remedy, but here are three steps that will alleviate your pain.
Assess the damage
Fully. You might feel physically ill, but you must open every statement and get a full picture of what you spent. You may be surprised to find that it isn’t as bad as you imagined, but in any case, you will feel better once you have faced the situation head-on.
Make a plan
Once you have recovered from the initial shock, or breathed a sigh of relief, it’s time to devise a plan to get yourself out of the hole and over your hangover.
If the damage is on your credit card, make a plan to pay the minimum on each card and allocate any extra money towards cards with the highest interest rate. Usually, store cards have higher interest rates and impact your credit score more negatively than regular credit cards.
If the damage is on your savings account, make a plan to cut back on a non-critical expense, perhaps your daily coffee, until you have replenished your account.
Put your plan in writing and share it with a friend to keep you honest!
Automate your plan
You have a better chance of succeeding if you automate your plan. If your plan is to make minimum payments on each card, with an additional payment to card X, then make sure you setup automatic withdrawals for each amount. The same applies for replenishing your savings. Works even better when your automatic withdrawals coincide with payday. The money will be gone before you even know it’s there.
Avoid a financial hangover in 2017 by analyzing your spending and creating a budget that plans for holiday spending. Learn more.