You budgeted. You made gift lists. You may have even talked your siblings into a $20 dollar limit on all presents. Still, somehow you managed to overspend this Christmas. Maybe you forgot a niece or didn't factor the cost of food and alcohol into your original budget, which left you scrambling at the last minute to come up with the funds. Whether you pulled out the credit card, or paid cash, overspending at Christmas can set you back until summer.
Don't let you blowing your budget over the holidays keep you from making strong financial decision as you start off the New Year. If you overspent on Christmas, here's what you should do next.
You've spent your time in denial, but January has come and gone and now is the time to face any damage you did over the holiday season. Take a few minutes to sit down with your bank statements or receipts and tally up how much you went over budget. Make sure you know where that money came from. Did you fish it out of January's grocery envelope or charge it on a credit card? Don't lose track of those unexpected expenses, or put yourself at risk for missing a credit card payment.
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Make it right
Once you have a clear picture of the damage done, get to work making it right. There are a few different approaches to recovering from your December overspending.
- Commit to a no-spend week or month, recouping your unexpected Christmas costs in one fell swoop. The idea behind a spending fast is committing to only paying your bills and making do with what you have on hand. Shop your freezer and pantry for cheap meals like beans and rice, burrito bowls, or pasta. Skip out on dinner invitations for the month, redirecting the money you normally spend while you're out with friends to paying off your Christmas debt. Drink coffee at home, instead of from the local coffee shop. These steps are definitely small, but they really add up when they are combined and observed over an entire month.
- Make a few small cuts for several months. If living on beans and rice for four weeks straight doesn't make you jump for joy, you can also recoup with a few small cuts over the course of several months. Can you live without Netflix and Hulu until you've paid yourself back? Maybe you scale back to one latte a week, instead of two, or you give up meat a few nights a week to cut back on your grocery expenses.
- Whether you pick up extra hours at your current job, pick up a freelance gig, or start selling your stuff, there are plenty ways to quickly pay off a little excessive spending. Websites like Fiverr allow you to sell your skills, starting at $5, and are an easy way to make quick cash. If you're really in the hole, a part-time job driving for Uber or delivering take-out could get you back to black quickly.
Plan to stay on budget next year
So, you've finally made amends for your spending indiscretions over the holidays and you're ready to move on with your year. Not so fast! Now is the time to make a plan for next year, or be destined to repeat the same mistakes. What caused you to overspend this year? Was is a lack of self-discipline or was your original budget doomed from the start?
Consider adjusting your budget for next year to reflect what you actually spent in December. Now, figure out how much you need to save each month to avoid going into debt this year and make it automatic. Set up a separate savings account and an automatic transfer. When November rolls around, you will be so glad you don't have to scramble to pay for your Christmas expenses.
I know from experience, it is so easy to caught up in your financial mistakes and let them hold you back from making progress. Now that you have fixed your Christmas spending spree and you've made plans to do better next year, it's time to forgive yourself and move on. Making money mistakes sucks, but they don't have to control your future.