Holiday Spending Can Add Up. Here's How to Get Ahead of it Next Year
Let’s face it — sometimes the holidays get the better of our financial stability. Even if you make an effort to stay on track, distractions are at a high in the month of December. If you use your credit card for monthly purchases and pay it at the end of the month, it’s easy to go over when holiday celebrations, gatherings and work functions dominate your free time. Now is a great chance to do a check-in on your December finances. If you’ve already gone over your budget, here are some tips to get back on track in the new year:
Create a holiday budget.
This is one of my favorite pieces of advice during the holiday season, so my apologies if you’ve heard it from me before! If you don’t already do this, take stock of how much you spent on the holidays this year and start a holiday budget in January 2020. Divide that amount by 12 and add that total to your budget each month. It is such a luxury to reach the holiday season and have a budget amount ready to spend! Don’t forget to include everything you spent, from bringing a bottle of wine to a party, to picking a last-minute gift for a new baby in the family, to teacher gifts, etc. The more you can account for the better and this will avoid a repeat experience next year!
Start a debt payoff plan.
Once you’ve calculated your holiday debt, choose a payoff plan that works for you. If your debt situation is broader than just overspending at the holidays, make 2020 the year you start a large-scale payoff plan. Many people like the Dave Ramsey Debt Snowball Method, while others opt for the High Interest Debt Reduction Plan (just like the Dave Ramsey method, but focused on the highest interest rate item first) or credit card balance transfers or debt consolidation. Both of the latter will involve a visit or call to your financial institution to see what they offer, but the idea is lowering your interest where possible. Do some research into a method that will work the best for your family.
Find a mobile budget application.
Busy individuals and families can have money coming and going at rapid speed, especially during the holidays! No budget or payoff plan works without accurate tracking. That’s why in today’s age of technology, there’s no reason not to have a budget app on your mobile phone that updates in real time. Apps like Mint and YNAB are popular options, and allow you to enter transactions on the spot, as well as receive alerts when you are nearing or have gone over your budget.
These suggestions will all help you recover from post-holiday debt, but I’d be remiss without saying it’s also a great practice to evaluate your holiday spending for next year. The reason of the season is felt most through giving back and adopting a family during the holidays or family experiences can go a lot further than a physical gift sometimes. And, help you to save some money during the holidays by helping others or creating memories that last a lifetime. Believe me, I’ve gone overboard at times just like anyone, but I recommend a post-holiday audit!
Kat’s Money Corner is posted in the Kansas City Star every week. Kat Hnatyshyn, when not blogging or caring for her little ones, is a manager with CommunityAmerica Credit Union. For more financial chatter, follow us on Twitter @CommunityAmerCU.