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4 Things You Can Do to Manage Your Finances After Spending Too Much on Holiday Shopping

As the holiday season comes to an end, the reality of how much money you spent may be starting to weigh you down. And, trust me, I know the feeling. While it’s a ton of fun to pick out the perfect gift for each important person in your life, the cost of those gifts can add up quickly. Sometimes, it adds up faster than you can keep up with.

I spoke with a few people who are way more qualified than I am to tell you just how to get your finances right in the new year (and without taking away all your fun). Whether you spent too much money on your credit cards or just need to build your savings back up after the holidays, you’ll be back to feeling financially secure in no time.

Sit down, take a deep breath, and looking at the damage that's actually been done

I’ve found that problems seem much bigger in our heads than they actually are. I think it’s important to try and keep a level head before (and even after) you know all the details and numbers. Look at your credit card statements. How many credit cards did you use? How much did you really buy with them? Then, check your checking and savings account. How much money is actually gone? 

Once you’ve figured out how much money you’ve spent and how much you owe, you need to sit down and create a budget for the coming year. The importance of creating a budget is just one of the many lessons I’ve learned about money, but I’ve found it to be the most crucial to your financial success. 

April Schneider, Head of Consumer and Small Business Products at Bank of America, says that you need to create a budget so you have an estimate of how much money you have coming in and going out.

“[T]ake a moment to think about your biggest monthly expenditures so you know what you’re up against in the new year,” Schneider says. “While you might not be able to cut any one expense by a large amount, cutting back on five monthly expenses even by a small sum is a good start.” 

It may be scary to tackle headfirst, but that’s the only way you’re really going to know what you’re dealing with. You can’t go into your newfound credit card debt blind (trust me). 

Remember that you can modify your budget as you go. A budget is not a one-size-fits-all kind of item. Each and every one of us are learning more about money and finances everyday and emergencies happen. Your budget isn’t always going to be perfect and something that worked in January may not work in March when you have an unexpected expense pop up.

Look at your credit cards and decide how to pay them off

I think it’s clear that creating a plan to pay off and actually paying off your credit cards can be daunting. But you aren’t alone, and it’s definitely possible to pay off the debt. You can even pay it off sooner rather than later if you have the right tools.  

No matter your experience with credit card debt, there’s one piece of advice that is vital to your success: always pay more than the minimum balance due. 

“[If you only pay the minimum] you’ll be losing money on the interest and you’ll have the credit card debt around much longer,” Allison Baggerly, founder of Inspired Budget, says. “Instead, set a goal for when you want to pay off your credit card balance. Then, break that goal down into bite-sized pieces.”

As someone who also has more credit card debt than I’m comfortable with, I definitely agree with this method. I would also advise that you stop carrying those particular cards around with you. It’s so easy to just swipe your card without thinking about it and that’s a habit that needs to stop. 

If you’re looking at your plan and find that you can’t budget any more money out of unnecessary expenses or other bills, there are a couple of other options to get extra cash. 

“[You can also try] selling old items,” Aly Gonzalez, owner of Slay All Clay LLC, says. “I’ve done [that, as well as other things] and have paid off almost $4,000 in debt this year. I didn’t have a job for six months.” 

When selling old clothing or home decor items, you can check out Facebook Marketplace, Poshmark, or Depop to make your listings. 

If selling old items or clothing pieces isn’t going to work for you, consider picking up small jobs in the neighborhood. If someone needs a babysitter or dog walker and you have the time (and they’re paying), volunteer to do it. With increases in remote opportunities because of the pandemic and ever-evolving technology, there are an abundance of options literally at your fingertips. You can even start your own side hustle to help bring in some extra cash (just make sure you do it legally).

Start making payments

Now that you’ve gone through all the money you owe and what you can spare from other expenses, it’s time to start making your payments. 

If you’ve got more than one credit card, you may want to consider using one of two options. The first is the debt snowball method. 

“Choose the credit card with the lowest balance and throw all your extra cash at it,” suggests Kari Lorz, who calls herself the Head Mama Money Nerd and founded Money For the Mamas. “Soon, it will be gone ... and [your brain] wants you to keep going! Now, attack the next smallest balance with everything you got, soon it’s gone, and it’s a big win again.” 

It’s basically a psychological game that you’re going to play. Since it’s clever advertising and “great sales” that roped you into spending all the money, you have to be clever in how you pay off the debt and in convincing yourself to keep going. 

The second option to pay off the same debt is what is called the debt avalanche method. 

“[This method] focuses on paying off your highest interest rate debt first,” Kalicia Bateman, Personal Finance Editor for BestCompany.com, says. “You would make payments on all your debt, but you would put a little extra towards the debt with the highest interest rate, allowing you to pay it down faster and save more money on interest.” 

At the end of the day, the best advice I’ve been given and that I can share with you (on top of always paying more than the minimum balance; seriously, it’ll save you so much money), is to put as much extra money as possible toward the credit cards. 

Bateman suggests holding off on those subscription services and other extraneous spending for a few months. That way you’re able to put even more money toward those cards and get that debt down. 

If all of this seems a little overwhelming, that’s understandable. Paying off debt can be scary and at times seem impossible. Just remember that whether you have a credit card with $200 or three cards with thousands of dollars, any amount helps beat that interest and get the principal amount down. Trust yourself and the repayment plan you’ve made.

Think ahead and plan for next year (time to save that money)

No matter the reason you need to get your finances back in order, take time to learn from what happened this year. You spent a little more than you should have and that’s OK. Sit down at the beginning of the year and plan for next Christmas. 

“While you [don’t] want to cut out all the fun things in your life,” Nermeen Ghneim, a banking expert and owner of personal finance blog Savvy Dollar says, “pick one or two items you can spare. … Make it a priority to put $50 to $100 a month in a dedicated holiday bank account.” 

If $50 or $100 a month sounds like it’s too high for your budget, I totally get it. Just keep in mind that’s only a suggested amount and it is completely customizable to your own budget and expenses. But that does only average out to a little over $12 to $25 a paycheck for those of you who get paid weekly.

I would also encourage you to set up something with your employer if it’s offered. For example, my mom has opted into an automated plan where she designates a certain amount of money to be taken out of her paycheck and into a “holiday fund” before she even gets it. This way, she doesn’t ever see the money and can’t miss it. 

If you did sit down and make a budget to pay off your debt or build your savings back up, you can use the same method for Christmas shopping. Sit down and write down how much you spent on each person this year. Do you think it was reasonable? Could you have spent less? Set a specific amount to spend for the people you want to buy for and write it down. This way, you can see about how much you’re looking to pay for all the gifts and you won’t be surprised in December. 

And, if you can, start buying gifts early. By purchasing gifts early, you’re making your life easier and less stressful. You may not get the cool Black Friday deals, but you do get peace of mind by knowing your shopping will be finished earlier and you won’t have to deal with an abundance of credit card debt.

No matter where you are on your finance journey, spending more than you wanted to during the holidays can take a toll on you. Just remember to take deep breaths, think things through, and believe in yourself. You can pay off that debt, bring your savings back up, pay your bills, and still have some fun in the new year. 

Follow Katie on Twitter

Katie is a Contributing Writer for Her Campus and works retail to pay the bills. She loves all things creative but has a specific love for writing and photography. She hopes to one day find the inspiration to write a book but, in the meantime, likes to write about life after college, traveling, entertainment, and the people who create things (and what they create).
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