As Christmas is over and Chanukah is slowly waning away, people around the world are enjoying new video games, toys, electronics, jewelry, and other presents from their friends and family. They are taking their gift cards to the store, but most people have not received their holiday credit card statements yet. I will give you a warning, they are on the way.
Overspending Sucks
While I often write about spending less than you earn, everyone screws up sometimes. If you did not have a good savings cushion for your holiday shopping, you have hit the dreaded holiday spending hangover.
Like the morning after you visit the bars, sometimes you have to deal with a hangover. You spent too much and can’t go back and fix it, so you have to press forward and tackle the problem head on.
Asses Your Problem
Now that you have overspent, it is time to assess the damages. If you used multiple credit cards, gather your balances (which is easy if you use a site like Personal Capital). If you only used one card, pull up your balance online and see where you stand.
Look at your monthly budget and find places you can cut and put extra into your debt. The faster you are paid off, the less you spend on interest. Why throw money away to the credit card company when you can be debt free?
If you have a regular savings contribution, it is a good idea to divert some of that money to your credit cards. Make sure that is only temporary, however, and don’t get in the habit of stopping your saving.
Let the Debt Snowball Begin
Now that you know your situation and you have come up with an extra funding source, put every available dollar into your debt (while keeping your emergency fund intact just in case) to clear your holiday debt.
Don’t Do It Again Next Year
Dealing with debt is a pain in the ass. While we may have family and societal pressure to give expensive gifts, plan out your holidays to stay debt free. Limit your gift exchanges and focus on experiential gifts to save money. Take a friend to coffee or for a happy hour to focus on relationships over material possessions.
Your Experiences and Tips
Ever been in the holiday hangover? Have ideas for those dealing with it today? Please share your thoughts and experiences in the comments.
Image by Staccabees.
Now, while Christmas spending issues are fresh in your mind, is a good time to consider what you enjoyed about this holiday season and what you didn’t. Make a few notes about what you want to change next year. You might want to write notes on next year’s calendar – such as reminder to yourself to start shopping in September – so you can spread out purchases and not overspend at the last minute. Make a list of things you liked, too, and make some general notes about what you’d like to do again – such as skating with friends, hosting a potluck dinner, or whatever you did that you enjoyed. Shift the emphasis to experiences with loved ones, rather than spending, and you’ll have a meaningful holiday season without breaking the bank.
That is great advice Tanya. Learning from the past is the best way to ensure a good future.
I think I need to return a bunch of stuff. It feels so much better that way!
I have one thing to take back. I didn’t get a whole lot, which is nice for my condo’s clutter.
I’ve never had true holiday hangover, but each year I think I spend more on Christmas. I guess that’s not a bad thing as long as we’re mindful. Fortunately, we both hate debt, so I don’t think going into debt for sake of gifts is even an option.
Spending a lot is fine if you plan and budget for it. Buying all of the gifts on credit and not paying it off immediately is where people get in trouble.