The holiday season is the peak time of the year for retail spending and borrowing. We all want to give the best to our family and friends, but often don't have the funds to support our spending. Use the time between Christmas and New Year's to develop a yearly budget to recover from last year's debts, and have money to spare for next year's festivities.
- Make a list of Your outstanding debts. Write down who you owe, and plan out how much you need to spend each month to pay off those credit card charges and bills from the holidays.
- Next, list your fixed monthly expenses in order of importance. This includes taxes, insurances, mortgage, and student loans - write it all down. Don't forget to factor in gas, groceries, medicines and necessary household expenses – they add up quickly!
- Now, consider your luxury spending. Cut back on the non-essentials in your budget so you pay off debts sooner. You'll have more to spend come next year without those bills hanging over your head. Write down all of the expenses you typically incur in a given month that you could live without, such as entertainment, dining out, travel, and personal care costs.
- Find your monthly subtotal, including non-essential expenditures. Compare the total costs per month with your net monthly income. Use any overages as savings for next winter's holiday gifts and party expenses.
- Be realistic, and seek help if necessary. You may find that even without luxury expenses, you are having trouble paying off your holiday debt. If that is the case, you may want to seek the advice of a trusted professional to help you take control of your expenses.
- Lastly, put the credit cards away and focus on spending cash whenever it's practical to do so. I find that cash is much more difficult to part with and I think twice before I spend it!
Remember to stay calm, and communicate with your family about the steps needed to start paying off your debts. Do your best to carry out your new budget, and save for next Christmas to avoid the post-holiday stress and guilt that comes with overspending.