Are you suffering from a holiday financial hangover? Don't despair, we’re going to drink some financial “hair of the dog” (this is a concoction that apparently gets rid of a hangover!) and feel better soon.
Holiday Financial Hangover Remedy in 5 steps
Step One - Breath
Take a deep breathe. Actually take a few – deep breathing helps lower our stress and think more clearly.
Step Two - Take Stock
Take stock of what you really spent for the holidays. This should include:
- groceries
- eating out
- parties
- babysitters
- new clothes
- gifts
- decorations
- alcohol/cannabis
- transportation
I know this can be painful. Our tendency is to skirt over this. You need real information to create actual change. Once you know the actual amount, figure out what you still owe on your credit card(s), line of credit, and/or payday loan.
Step Three - Plan
Create a plan to pay back your debt. Ask yourself if you can pay it off by April 1st (essentially three months) by budgeting hard. This allows you to put a lot of effort in for only a short period, like a sprinter in a race. Some ideas to help you budget hard can include:
- increasing your income (can you get a temporary job to pay off the debt?),
- decreasing your expenses (can you eliminate cable for 3 months or make your coffee at home or make all your meals at home temporarily?)
- selling an asset that you don’t need (can you sell some stuff that you don’t use or need?)
Step Four - Pay it down
Take every bit of extra money and put it towards your debt. Make sure you’re not reusing your credit.
Step Five - Plan for the future
Once you’ve paid off your holiday debt, make a plan to avoid this again in 2020. Take the amount that you calculated in #2 and divide it by the remaining months in the year. Transfer this amount of money every month to a separate holiday savings account. This will help you create a credit-free holiday in 2020.
If your holiday debt won’t be paid off within three months, consider a different solution, especially if you’re carrying around unsecured debt (and stress).
You could talk with your financial institution about consolidating or refinancing.
If that doesn’t work, connect with your local non-profit credit counselling agency that can help you assess where you’re at financially and help create a reasonable and manageable plan to getting there.
It’s free, confidential and you’ll walk away with information, resources and next steps to help you with your holiday financial hangover.
OakvilleNews.org articles about Personal Finance by Stacy Yanchuk Oleksy and you can follow Stacy on Twitter @StacyYO_CCS
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