Holiday recovery: Four steps to get your finances back on track
If you went over budget this past holiday season, you may be feeling some heartache now, facing big credit card bills or a depleted savings account. Good news: These four tactics can help put your finances back on track.
1: Regain some balance in your budget.
Subtract your regular monthly expenses from your monthly income. Use some of what’s left to help pay down your debts or rebuild your savings. If your budget doesn’t have room to spare, examine your expenses to find spots where you can trim a little.
2: Determine a deadline.
You’re more likely to achieve your goal if you set a timeline. Take the amount from step 1 and divide it either into the total debt you want to pay off or your savings goal. This will give you an estimated number of months for reaching your objective.
Goal = $1,000 added to your bank account
Monthly deposit = $100
Timeline = 10 months ($1,000/$100)
3: Boost your income.
Did you get a year-end bonus at work or cash gifts during the holidays? Put at least part of this extra money toward additional credit card payments or bank deposits. Do the same with any other added money you might get during the year, such as a tax refund. You can also sift through your wardrobe and home to uncover items you don’t need — then sell them through websites or a mid-winter garage sale.
4: Remove temptation.
It’s impossible to eliminate debt if you keep adding to it, so put your credit cards temporarily out of reach. (Some people literally freeze them in a block of ice!) Next, stop shopping: Post-holiday sales can be tempting, but resist. For items you actually need to buy — including groceries — shop sales and compare prices.
These four steps will set you on the right path.
Use a visual aid to track your progress. It can act as positive reinforcement and help keep you focused on your goal. Put up a chart on the refrigerator, create a spreadsheet on your laptop or add notes to your smartphone.
If you’re paying down debt, use online banking or mobile app payment features to schedule recurring payments to your credit card. This can help you avoid late fees and added interest.
If you’re building up your savings, have direct deposits made straight from your paychecks to your account — so you can’t spend the money first on something else.
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