It is tough to manage holiday debt just after Christmas but this is a reality for a lot of people after the holidays. This can also dampen your post-holiday spirit knowing that you racked up a lot of debt celebrating the holidays. All the gift-giving, travel, and even social gatherings you attended put you in the red.
This is why it is important that you manage your holiday expenses and the debt that comes with it. You can quickly get lost with all the expenses that you could end up with more than what you can pay for. If you do get into this situation, there are a few things you need to keep in mind to help you get through your situation.
Double-check your credit card statements
You may not realize it but there could be mistakes in your credit card statements. This can be honest mistakes by the shop or your lender or a sign of something more severe. There might be times when the shop or the restaurant made a mistake by billing you twice for the same item or meal. Your lender could also make mistakes when putting together your billing statement.
These are some of the honest mistakes that seldom happen but are still a possibility. However, one scenario you do not want to be in when you spot mistakes in your credit card is that thieves are starting to use your credit for personal gain. There are some who try to charge small amounts at the beginning to try and see if it will go through.
Once it does, they will begin to charge bigger amounts on your card quickly running up your balance until the limit. Your lenders are more aware of unusual card activities and they are more proactive at stepping in and informing you about it. However, it is always a good idea to be proactive yourself and discern red flags before they become full-blown financial challenges.
Manage holiday debt and pay everything off
The easiest and fastest way to address holiday debt is to pay everything off before the month ends but this is easier said than done. If you racked up a huge debt as you celebrate your holidays, it might be close to impossible to try and pay everything off. You could have the money but this could put you in a tight financial spot. CNBC shares that about 42% of people would need three months to pay off holiday debt.
The least you can do is pay the minimum amount on your credit card statement. This will help you stay current on your payments but it can cost you a lot. For one, lenders can start putting fees and penalties on your payments which brings the amount higher in succeeding months. You end up paying for a longer time and for a bigger amount.
If possible, aim to pay more than just the minimum on your card to help you pay your balance a lot faster. The sooner you pay everything off, the more money you can save. If you can look at credit card debt consolidation to save money then do so but be mindful of your payments as well or you end up where you left off.
Stay away from adding more debt
One of the best ways you can manage holiday debt is to make sure that you do not make more of it. If you already know you are already in debt, make sure that you do not add to that amount anymore. You might be having a hard time thinking about where you will get the money and charging more will add unnecessary stress.
After Christmas, you still have the New Year to think about and that can also cost you money. Make sure that you do not rack up huge debt expenses before the year ends. It could be tempting especially if you managed to pay all your holiday expenses off and know that you are not carrying a balance. You might give in to charging again for things that you want. Be more vigilant and keep your sights on ensuring you maintain a strong financial position before the year ends.
How to make it better at the start of the year?
After you have gone through some of the ways to help you manage holiday debt, there are a few ways to help you strengthen your finances for next year.
Create a comprehensive budget
You can already start creating a more comprehensive budget for next year even before the new year comes. It would help if you base it on your existing budget and identify areas you can improve on. There could be expensive items you can cut down on or investment opportunities you can put money on to help you grow your money. This is important as CNN shares that only about 41% of consumers use a budget.
Remember that your household budget is one of the most crucial financial tools at your disposal. It allows you to make informed money decisions at any given time. If you know how much money is coming in and what your expenses are, you get to make adjustments as you go along. Without your budget, money decisions you believe will improve your finances might only do more harm than good.
Monitor your expenses
If you were able to monitor your expenses as you tried to manage holiday debt, there should be no reason why you cannot do it for next year as well. Put a system in place where you can monitor your expenses as you make them or at the end of a specific period. It can be at the end of the day, the week, or the month.
You can choose to write them down, put them on your phone, or better yet, use a mobile app that will help you track your money. There are a number of them out there which can help you get an overview of where you spend your money, they can even help you make automatic savings as well. This is because some of the apps can connect to your bank account and help you transfer or monitor your account in real-time.
Focus on increasing your income
At the start of the year, you could benefit from having a financial goal in order to focus your time and effort. One that would pay off in more ways than one is looking for ideas on how to increase your income. There are traditional and non-traditional routes you can look into all in a bid to help you bring more money into your budget every month.
If you have a day job, the most common route is to look for ways to earn more either with a job promotion or putting in more overtime work. You can also look for a side hustle you can do outside your day job. This is best oi you look at an income-positive hobby which allows you to earn money while doing something you already love doing.
There are also passive ways to earn money such as investing the money in stocks or even creating content online. You can write ebooks you can sell to people. It is also a good idea to make tutorial videos you can upload and monetize them through online ads.
There are a number of ways you can manage holiday debt and you have to make sure that you go through them and use one that suits you best.