Despite all your careful holiday budget planning, you’ve realised that you’ve come back in the red. Whatever you do, don’t ignore it or even worse give up on budgeting all together. If you don’t do damage control now, the added interest and higher instalments will put even more pressure on your monthly cash flow.
5 Steps to help you tackle your holiday debt:
Step 1: Calculate the damage
Before you do anything else, first calculate the total damage both you and your partner made. Remember to include purchases that might not reflect in your account yet, as well as purchases made on other accounts (clothing and store cards etc.).
Step 2: Make some extra cash by selling unused items
The New Year should always start off with some organising. Why not see if there is money to be made in the process? Do a garage and cupboard clear out for anything valuable you haven’t used in years, and sell it.
Pay the money you make into your overdraft, credit card or clothing/store account.
Step 3: Freeze spending for the entire January
Damage control unfortunately requires freezing any January spending on luxuries for e.g. entertainment, clothing, dining out, hair and beauty etc. After your monthly deductions and financial commitments have been met, save, save, save. Save on groceries by cutting the budget and only buying the bare necessities. Save on petrol by limiting trips, exploring the idea of carpooling with a colleague or two, or perhaps working from home one day a week. Etc.
Step 4: Revisit your budget
The last thing you want is to allow December’s spending to influence any new financial goals you have set for 2017. If you haven’t been able to repay your holiday debt by the time your January salary is paid, relook your budget. Make drastic changes for e.g. cancelling satellite for a few months, and ensure that you are able to repay debts and stick to your new goals at the same time.
Step 5: Start saving for December 2017
Expenses over the holidays can quickly spiral out of control. That is why it is never too early to start saving for the next festive season. Saving throughout the year can help you save more so that you aren’t forced to use your tax refund or bonus to fund your holiday. This way you can use your tax refund and bonus in more constructive ways.
The New Year gives all of us a fresh start and a second chance at everything we didn’t do so well with in 2016. Our finances can always do with a new, fresh, calculated approach but if you need more professional help to get your debt sorted, give Debt Rescue a call. We will help you get the second chance you deserve.