Nobody likes a hangover. Our friends at NerdWallet are here to help you and the fam.
Unless you took the Scrooge route this holiday season, you’re probably fighting off a serious holiday spending headache right about now. While the official statistics aren’t in yet, a mid-December 2013 Gallup poll revealed Americans intended to spend an average of $740 on holiday gifts. With that figure in mind, you might be wondering how you can regain your personal financial stability after a big shopping spree (or three). Here are five tips you can use to recover from your current holiday spending hangover.
Spend less money
Simple, but effective; and chances are your income is relatively fixed. So, if you are already stretching your money to its limit, you’ll have to trim your budget. Of course, food, housing and utilities are essentials, but by cutting back on non-essentials you’ll have more money available to pay down your holiday debt. Try:
- Carpooling to work
- Taking your family to free local events (car shows, festivals, museum exhibits, etc.)
- Borrowing books from a local library, instead of buying them
- Dining out less, and cooking at home more often
- Trimming your television package (dropping a premium channel or two could help)
Sell unwanted items
Have a yard sale or consider posting gently used items on Craigslist or eBay to put some extra cash in your pocket. With the economy still a bit shaky, everyone’s looking for bargain buys and you might have exactly what someone else is looking for. Be honest about what you no longer need. After all, that juicer you don’t plan on using might be ideal for your health-conscious neighbor. Selling your items will not only clear out your clutter, but you can put your earnings towards paying off debt.
Earn more money
If you’ve tried some of the tips above, but simply can’t cut back enough to recover from your holiday spending spree, it may be time to think about finding ways to supplement your income through a second job. It can be stressful taking on additional work, but remember that this is only a temporary situation!
Options for earning some extra money include:
- Dog walking
- House cleaning
- Pet sitting
- Working overtime at your current job
The idea is to find work that will generate money without a long-term commitment and without burning yourself out too much.
Transfer high-interest credit card balances
Look for balance transfer options with low rates and transfer your high-interest balances to a new card. Chances are you’ll save a considerable amount by avoiding hefty interest payments. However, keep in mind that you still need to stay on top of your balance and make necessary monthly payments; otherwise you could see a severe negative impact on your credit score.
Plan for next year
Now that you’ve felt the financial sting of excessive holiday spending, use this as motivation to avoid the same fate next year. Start saving for your year-end holiday purchases now by opening a specialized savings account designed for holiday expenses. Devote a small percentage of your monthly paycheck to it throughout the year. Alternatively, you can open a Christmas Club account, which can earn better interest, but restricts withdrawals until it reaches maturity.
There are many other creative ways to save money for your holiday spending next year. The main idea is to only spend money you already have in pocket once the holidays arrive.
If you dug yourself a little too deep this time around, be sure to look into low-interest balance transfer options. Maximize your income by trimming the fat off of your budget, selling unused items and picking up extra work as needed. Finally, avoid this year’s debt by getting an early start on saving money.
By following the tips above, you’ll avoid relying on credit cards or barely scraping by from paycheck to paycheck. After all, you can’t spend more cash than you have, so if you plan it right, you won’t need to get yourself out of another holiday hangover next year!
Damaris Olaechea, NerdWallet