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Did overspending at Christmas encumber you with holiday debt for the New Year? The holiday season is often one of indulgence; too much food and too much spending can dim even the brightest Christmas spirit. We’ve all heard all of the post-holiday blues that creep up in the New Year after all the gifts have been opened, the parties have been celebrated, and then reality begins to sink in as we re-enter the daily grind of work, chores, and yes... bills.

But what about the post-holiday financial blues? The blues that come once you realize that too much holiday spending will put a dent in your spending all year-round! If you’re like many of us, you overspent this Christmas season and blew your holiday budget. And you are actually ahead of the game if you had a holiday budget since a majority of Americans do not have a holiday budget.  According to a 2017 consumer survey, conducted by MagnifyMoney, you are not alone in your post-holiday financial stress. Many of us entered the new year with an average of $1,054 in debt from Christmas Shopping.

So, if you are like many of us and blew your holiday budget, here are 3 ways to recover from Christmas overspending.

Perform a Christmas Spending Post-Mortem

Before tackling. Recover. Self-care
Changing spending habits takes energy, willpower, and determination so a little rest may be in order first. Make sure you don’t tackle financial planning while in recovery from a holiday hangover (literally and figuratively).  Holiday recovery can be as simple as taking a 24-hour break from electronics to reset your focus; drinking plenty of water and eating more leafy greens to reset your body from all those holidays sweets, and taking time to reflect on 2018 and celebrate all the wonderful experiences and successes.  You deserve it!

But don’t revel in resting for too long! Set a target date for taking a hard look at your holiday spending and stick to it. Are you still celebrating? Then set January 2nd as your target date. Or would you prefer to tackle this debt now and enter the new year with a plan? Then set December 26th as your target date to perform a Christmas spending post-mortem.

Stop the Debt Snowball
You are more likely to continue spending as usual if you don’t stop and assess the damage. Don’t wait until the credit card payments are due. Figure out exactly how much you spent on the holidays. And don’t stop at gifts; add holiday events and celebrations to the financial tally, as well. Depending on your credit card billing cycles, you may not see the damage reflected on your accounts until after the new year.

Figuring out exactly how much you spent is crucial in order to develop a plan that will get you out of holiday debt. Knowing exactly how much more you owe than an average month of spending is important, especially if you are usually able to pay your balances in full. However, it the holidays wiped out your bank account and you can only make the minimum payments, you may not understand how quickly interest accrues when credit card balances are not paid in full every month. Consider this example: Using the average holiday debt amount of $1,054 we will calculate an estimate of what you might end up spending without a plan. Credit card APR is at about a 14% interest rate (and merchant credit accounts are over 20%). So if you only made a monthly minimum payment of $25; you won’t be done paying for your 2018 holiday expense until 2023, accruing almost $400 in interest. Stop the debt snowball by calculating how much you spent on the holidays, so you can better plan how to pay down the debt quickly.

If you need more help with how to tackle credit card debt, contact one of our specialists today. They can provide you with tools and methods to plan out how to best pay-off credit card debt. LoanMe representatives can also calculate a personal loan can save you money on credit card interest rates.

Re-Visit This Year’s Holiday Budget
The best way to prepare for the next holiday season is to identify what worked and what didn’t work in your 2018 holiday budget plans.  Re-visit your budget and jot down a few notes about what failed to help you meet your budget goals this year. Here are a few examples of questions you can ask yourself to help you identify your budget woes and successes this year:

Did you have too many people on your holiday gift-giving list? Did you overcommit to all your family members? Which gifts did people like? Which gifts seemed frivolous or received a lukewarm reception? Has your extended family considered a secret Santa gift exchange, where each family buys a gift for one other person rather than the expectation to buy several gifts - one for each person in your family?

Forget the gifts for a minute, holiday events can be just as expensive! Expenses such as a new festive outfit, Nutcracker tickets for the family, or food and decorations for your annual holiday get together?  Reflect on all of them and consider which ones were worth the extra expense and which events can be skipped next year? Additionally, many of your favorite charities hold their annual galas at the end of the year.  Will some of them be just as grateful for a direct donation rather than the expensive gala tickets? Especially since those tickets cover costs of the event and only a portion goes directly to the charity.

The best way to avoid pitfalls in your budget planning is to prepare ahead, reflect on financial missteps, and celebrate money saving goals that were met.

2. Make the Holiday Season Work for You

Use Tax Returns and Holiday Bonuses Wisely
Does your company provide you with an end of the year bonus? Consider using that check to pay off your holiday debt. It may be tempting to use the bonus to reward yourself for all your hard work, but investing in your financial stability can be the best reward! Are you expecting a big tax return this year? While tax returns shouldn’t be relied on every year to get you out of holiday debt, a well-timed financial rescue may be just what you need to get you back on financial track… and keep you there in 2019. Don’t forget, if you wait until the deadline to file your taxes every year - your credit cards don’t stop accruing interest for the next 4 months until April 15th rolls around. If the check from the IRS is the only way you can identify to rescue you from holiday overspending, then consider filing early so you can pay off your debt quicker and save yourself some money in accruing interest balances.

Don’t Leave Money on the Table at the End of the Year
End of the year deadlines and Christmas overspending can sometimes come with perks…
Make an appointment with your HR representative before the end of the year to make sure you are not missing out on any employee benefits such as PTO payouts, flexible spending accounts, or increasing your retirement contributions to take advantage of a company match. While this may not help you recover from your 2017 holiday debt, making smart decisions for your financial future will give you that extra motivation to possibly make some tough budget choices the next few months to recoup from blowing your Christmas budget. 

Did you know that many credit cards come with a cashback reward program where a percentage of your spending is paid back to the cardholder can be applied to payment deadlines? While overspending on your credit cards is not recommended, you can make the best of some of your financial missteps. Check with your credit card company to see if they offer cashback rewards. Bonus Tip: use your credit cards wisely all year long and save up your cashback rewards for next year’s holiday expenses!

Exchange Gift Cards and Presents for Cash
We know that presents are part of the fun every Christmas! But eliminating stress from Christmas debt can be fun too - or at least being stress-free is more fun. Gift cards are plentiful every holiday season. Co-workers, bosses, and long-distance relative often give gifts cards to avoid awkward gift selections or extravagant shipping costs.

It may not seem like a fun idea but it is a smart idea… consider selling your gift cards or stashing them away for upcoming expenses.  There are sites that will buy unused credit cards from you for a small fee. CardPool and Gift Card Granny are just a few examples and several options can be found with a quick google search.  While still in recovery from this year’s holiday indulgence, the 2019 holiday season may seem far away but planning for it can start now. After Christmas sales are a great opportunity to use your unused gift cards to start crossing off items from next year’s list.

It really is okay to return Christmas presents... Do a visual inventory of your belongings and categorize them by your desires versus your needs. Do you really need that uber-fancy espresso machine from your parents? Returning the espresso machine for cash may seem like a tough choice now, but come next month when credit card payments are due and interest has been accruing all month-long, you will be grateful for that extra cash to help pay down the balance. Many items come with a gift receipt for this reason but if they didn’t some stores still honor return requests if made within a week of Christmas day. And if they don’t many will still offer a store credit, which you can use to offset planned expenses like back-to-school clothes next fall or that gift you need for your best friend at their wedding this spring.  Bonus Tip: If the retailer doesn’t let you return that uber-fancy espresso machine consider re-gifting, which is just as acceptable as returning gifts, especially when your financial peace of mind is on the line.

3. New Year, New You
Assess Your Current Financial Situation

On the road to recovery from holiday overspending, this article provided suggestions about reflecting on the past, taking advantage of the present, and now we will talk about preparing for your financial future! Take out your notes from the Christmas Spending Post-Mortem (from the first section of this article) so you can refer to it and make informed choices in preparing your 2019 holiday budget.
Get ready to make a budget and stick to it in 2019! Start with your credit report. Every consumer receives a free annual report. You can contact each of the 3 credit bureaus, or save your energy for budgeting and request one from the Federal Trade Commissions’ endorsed website, where you can receive one from each of the 3 credit reporting agencies with just one application. Additionally, many credit card companies offer free credit report tracking with your account so you can monitor your progress all year long. You may think obtaining a credit report isn’t necessary when you can view your credit transactions online but reviewing your credit report has additional benefits:

Credit card theft is rampant during the holidays and reviewing your credit report will alert you to any unauthorized or fraudulent charges. Learn how to protect yourself in our article “3 Steps to Prevent Credit Card Theft this Christmas”.
Since credit reports list all your balances, you can save time by not having to individually check each merchant and credit account. Review your credit report and calculate how much your credit card balances grew over the last few months. Write this number down and ask yourself “How much did I go over my holiday budget?” or “Did I spend more or less on Christmas than I anticipated?”
Also, take note of your credit score for extra motivation in sticking to your budget. By paying down credit card balances you can improve that score in just a few months! Use this score as a benchmark when paying off your holiday debt. Check it every few months to see how much progress you’ve made.

Put Your 2019 Budget on a Diet

The most talked about New Year’s resolution is losing weight but why not consider your financial health and trim the “fat” from your monthly expenses? Rather than taking 5 years to pay off your holiday debt, look at how you can cut expenses so you can make balloon payments on your debt and eliminate it in less time. The suggestion to review your budget assumes you have a budget, when in fact a majority of Americans don’t. So, if you are one of them, consider this the perfect incentive to create a budget for your financial future!

Even without a budget, you can review credit card statements to identify expenses that can be reduced or eliminated for the next few months. Plan out your spending for the next few months until you catch up with your holiday overspending. Many fellow ‘Budget Dieters’ find that skipping the restaurant and cooking at home; cutting back on one or two visits a week to Starbucks and bringing your coffee to work; and streaming movies rather than going to the theatre.  Bonus tip: Perhaps after a few months of skipping dining out and bringing your coffee to work, you will realize you don’t miss it that much and once your debt is paid off you can use that extra cash to start saving for next year’s holiday spending!

Start Planning for the 2019 Holiday Season   
Start saving now. We know it might seem too early to start planning for next year. But especially if you blew your 2018 holiday budget, it’s never too soon to start saving for the  2019 holiday festivities. Set up a ‘Holiday Savings’ account at your bank and keep it separate from your other accounts. Based on what you learned from your Holiday Post-Mortem, identify a reasonable amount of money that can automatically be transferred into your holiday savings account each month to set you up for success next year.

Can you use the season for New Year’s resolutions to have a few tough conversations with family? Fill them in on what you learned from this years holiday overspending and how your financial security is one of your top resolutions. It’s common for many of us to connect how much we’re loved with the monetary value of presents received. We all get wrapped up in social media and television shows that can often convince us to “keep up with the Joneses” but after careful reflection, you can learn to count your blessings in other ways. Use these annual New Year’s resolution conversations to your advantage and start setting expectations for a new kind of holiday gift-giving season in 2019.

The Best Way to Recover is to Invest in Yourself
As the holiday season draws to an end, don’t let holiday stress follow you all year. You can recover from Christmas overspending and use what you learned to plan for a financial smart holiday season in 2019. Even with the best “Budget Diet” you can come up with, it can take many of us 6 months or more (not to mention 5 years) to recover from holiday debt. If a strict budget, stress from looming payment due dates, and the realization that you just don’t have enough money left over from the holidays to meet your financial obligations, consider contacting one of our LoanMe representatives so we can discuss how we can provide you with support.

You have options with LoanMe. Start your application today!