How to Recover From Holiday Overspending
The National Retail Federation found that consumers planned on spending a total of $997.79 - about $50 less than 2019 - on average during the 2020 holiday season. Even if you took the time and laid out a detailed holiday spending plan, unexpected costs and travel expenses can add up. At such an enjoyable time of year, it’s easy to spend and forget your budget. Look at January as your reset button. Yes, you may have gone a little overboard during the holidays, but it doesn’t have to set back your entire year. Take a deep dive into your bills and get back on track so that you can reach your 2021 financial goals. Here’s how:
Check to See the Damage Done
Before your credit card bill comes due, it’s better to know now what the damage is so you can prepare. If you paid for anything with cash, collect your receipts and add them up. With a credit or debit card, you can log onto the card’s website, your bank’s website, or download the app to get your current balance. Combine everything to figure out what your total bills will be for your holiday spending.
An easy way to recover is to start returning. You most likely bought yourself a few presents, which are usually the easiest to return. Apply any refunds to your holiday spending bills. If you receive store credit, you can use that for necessities.
Make a Detailed Recovery Plan
Having a budget is the easiest way to save money and have a handle on your spending. Plus, it can help you focus on your goal – to pay down your holiday debt.
When creating your recovery plan, focus on your credit cards first to avoid paying interest. If you have to take cash from your emergency fund, make it a priority to get that fund back to a healthy balance once your debt is paid off.
Partake in a ‘No Spend’ Month
While you can’t avoid paying your necessities like rent, mortgage, groceries, and utilities, you can choose to cut the number of times you eat out or delete the items in your Amazon shopping cart (we all know it’s full). If you know exactly how much you make each month, subtract what you spend on your necessities, and apply the rest towards your bills.
You’d be surprised at how much skipping your daily Starbucks run or brown-bagging your lunch can save you each month. And that’s not to say you can’t have fun during a ‘no spend’ month. Choose to see a matinee movie instead of late-night to save some money, or find free events in your area.
Plan for Christmas 2021
As you work to pay off your holiday spending, take note of how you got to this place. If you didn’t make a holiday spending budget, make sure to track your spending this year. Commit to making a list of gifts that are in your price range, and don’t spend money on extravagant gifts you cannot afford. Create a savings account and deposit a small amount each paycheck, or enroll in Pocket Change, where each purchase made using your Pioneer debit card will round up to the nearest dollar and the balance will be automatically transferred to your Pioneer savings account. Even the smallest things can add up and help you in the future. It’s never too early to start saving.
The material provided on this website is intended for informational purposes only. Links to other web sites are provided for reference and do not constitute a referral or endorsement by Pioneer or its affiliates. Please note that such material is not updated regularly and that some of the information may not be current. It is recommended that you consult with a financial professional for assistance regarding the information contained herein.