Recover From Holiday Spending

Smart Solutions • January 2014

The holidays are a time for hosting parties, visiting family and giving gifts — and that can lead to overspending. If January finds you in a financial hole, try these five simple steps to help repair the damage.

1. Hit the Reset Button
Whether you drained your bank account, maxed out your credit cards or both, your budget now needs a reboot. Add up your fixed expenses, subtract them from your take-home pay and determine how much of the remainder you can dedicate to paying down your debt and/or rebuilding your bank balances.
2. Make a Timeline
Next, divide your total debt (or the final account balance you want to achieve) by the number you calculated in step one. This will tell you how many months it will take to reach your goal.
3. Prioritize Debts
When it comes to paying back your loans, concentrate first on those with higher interest rates. Try negotiating with creditors for better rates or consolidate multiple debts into one loan.
4. Increase Cash Flow
Reduce your living expenses by eating in more often, carpooling to work, canceling your cable TV, reducing your cell phone plan, etc. Consider selling unwanted items or picking up part-time work.
5. Plan Ahead for Next Year
The best way to manage holiday spending is to set funds aside for it every month, all year long. The money will be there when you need it, allowing you to enjoy the holidays — and the time that follows — with less stress and more joy.

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