Christmas came and went by in a flash for me this year. I’m not sure if it’s because we were locked down and that meant that most days were remarkably similar, or it’s because I’m just getting older and everything seems to fly by much more quickly. Still, the only thing I remember from this past holiday season is the credit card bills that are starting to come due.
Luckily, I didn’t overspend too much this year and the stimulus checks will help dampen the damage, but many of my friends weren’t so fortunate. I sympathize with them though, because I’ve been there. I know the feeling that the Christmas list keeps growing and our bank account keeps shrinking. With gifts left to buy, let alone food and other extras, we feel we have no choice but to dip into our savings or drive up our credit card balance.
If you overspent because of pressure to live to a standard that exceeds your income (especially during the holidays), the problem should be addressed; but that won't help you deal with the immediate problem: the aftermath of your Christmas spending frenzy.
So what should you do now that it’s already the end of January and you have to pay your bill?
Redirect your spending guilt.
You've already over-spent, so unless you return items (if you already gifted them, that might be awkward), you're unlikely to immediately recoup the loss. While over-spending isn't something to feel good about, neither is it necessary to let guilty feelings keep you down. If you feel guilty because you dipped into savings or jacked up your credit card, it won't solve your problem. Instead, use your guilty feelings as fuel to take positive steps and correct the problem, such as...
- Setting aside money from your next few checks to replenish your savings or to quickly pay off your credit card.
- Closing credit cards that you've paid off to eliminate the temptation to use them next year.
- Crunch the numbers on a spending budget for the new year.
These are damage control measures, I know, but slamming the foot down mentally and saying no more will start the process of righting the ship and prevent you from digging into an even bigger hole.
Quickly regain control, whatever sacrifices are necessary.
Just because you can't change the fact that you've over-spent on Christmas shopping doesn't mean you should have a defeatist or nonchalant attitude about it either. If you can't regain control of your finances quickly, you may need to question whether you control your money, or your money controls you.
Regaining control may mean tightening things up for a few months until your finances are back where they should be. This will look different depending on how much you've splurged and how quickly you can replenish funds. Regaining control could mean cutting out your extra cable channels, eating out less often or not at all, eliminating any unnecessary spending, skipping gourmet coffees, or packing your lunch for a while. The more quickly you can regain control of your finances, the faster you can move on to 'normal' living and financial security.
Make this a priority, especially if you are in credit card debt right now. It’s easy to feel okay when credit card companies allow you to just pay the minimum balance due, but don’t forget that you are getting charged those 15 - 20% yearly interest for every dollar that you don’t pay in full after the first billing cycle.
Learn the warning signs to avoid spending binges.
Over-spending is just like any other vice you have to work at overcoming. The first step is recognizing the signs that you're in danger of reverting to that type of behavior again. Because let’s face it - Christmas is coming again this year and every year after that. Are you spending too much time browsing online or can’t wait to get back to shopping freely in stores? Are you lingering over purchases you know you shouldn't make? Are you refusing to acknowledge or look at how much you've already spent? The best time to take control is before your spend, not after. Treat your problem area like you would an addiction, if necessary.
Don't set yourself up for failure and expect the results to be different. Make it harder for yourself to over-spend from now on.
Recovering from overspending during the holidays can take months. Unless you take steps to avoid it in the future, you'll just be getting your finances ready for another disaster because the holiday seasons will come around again in a few months. In fact, you could still be digging yourself out of a debt hole you left last holiday season by the time next Christmas rolls around. Follow these steps to keep yourself in check and make sure this doesn’t happen to you.
- Make it difficult or inconvenient to access your savings or emergency fund. Use a separate savings account that you won’t see whenever you log into your checking account to pay your bills. When you don’t see a big number sitting in a savings account, then you will be less tempted to spend that money. Remember - emergency funds are for emergencies and seeing the Jimmy Choos on sale isn’t an emergency!
- Close credit card accounts before the next shopping season and immediately shred any new offers in the mail. Alternatively, you may want to just cut up the credit cards instead of closing the account altogether to preserve your credit history. If you do this, remember to delete all the saved credit card info you have saved on your browsers and shopping websites too.
- Set aside extra money all year for Christmas shopping so spending at the end of the year doesn’t overwhelm your November and December monthly budgets.
- Set limits on gifts for each family member and don't bend. A thoughtful gift doesn’t have to be expensive. Trust me.
- Better yet, suggest to your family and friends to not trade gifts, or trade handmade gifts that don’t cost an arm and a leg. Chances are good that your family and friends are going into debt to buy gifts for you and your children too. Help each other out!
Over-spending isn't the end of the world. With a little discipline and a game plan for avoiding the same pitfalls in the future, you can fully recuperate and set the groundwork for better control of your finances.