Many of us might plan to spend a certain amount during the holidays, but the reality of what we actually spend differs from our plans or budget. Each year, Americans spend more and more on holiday gifts, and with supply-chain issues thrown into the mix, you may opt for more rapid shipping and impulse purchases. As a result, you could start the new year with more debt from the holiday season than you anticipated.
Fortunately, even if you spend more than you bargained for during the holidays, you can get your finances back on track with a sound strategy. To help, we've compiled a list of ways you can recover from holiday debt and spending.
How to Recover From Holiday Debt
Here are some of the steps you can take to recover your finances after holiday spending.
1. Try Doing a No-Spend Month
One of the simplest ways to get back on track with your finances after overspending is by not spending at all during a no-spend month. During this month, you'll avoid spending on anything outside of your necessities. Necessities include costs like:
- Medical bills
Avoid unnecessary purchases, such as movies, apps, takeout, haircuts, new clothes, and junk food. By dramatically reducing your spending for a month, you may be able to save money quickly. You can then use these savings to pay down your credit card debt and get your finances back on track faster.
To get the most out of your no-spend challenge, you may also want to use coupons and comparison shop to make sure you're getting the best deal for any of your necessities. You can use money-saving apps to reduce the cost of your everyday purchases. You can also cut down on unnecessary trips to save gas and opt for generic brand products when possible.
2. Cut out Unnecessary Expenses
Your no-spend month can be an excellent way to learn more about your spending habits and what discretionary expenses you can eliminate from your budget until you get your finances back on track. Some of the unnecessary expenses you may want to eliminate or reduce to pay down your debt more quickly include:
- Utilities: Unnecessary utilities like cable can be cut. If you find that you miss certain services after you get your finances back on track, you can sign up for those services again. Though you have to pay for your electricity and water, you may be paying unnecessarily high costs for your utilities. Be mindful about turning off lights, and wear layers so you don't need to keep the heat on as high. You can also try to negotiate your bills, and if you can't negotiate the costs down, consider searching for another provider that can offer a better rate.
- Takeout: Cooking at home can dramatically reduce your monthly food costs. As such, you may want to avoid eating out at restaurants or getting takeout until you can pay off your debt. You may even want to lower this line item in your budget permanently.
- Everyday costs: If you work outside of the home, there are likely minor daily expenses you can reduce or eliminate altogether. Instead of buying a coffee, make coffee at home. Rather than grabbing takeout on your lunch break, pack a lunch. Bring a reusable water bottle to work instead of buying water from the vending machine. Even seemingly small expenses can quickly add up. Cutting out a $4 coffee every workday will save you $80 a month — try to look at these expenses from a month's cost perspective to understand the true savings you can incur.
- Subscriptions: Evaluate your subscriptions to determine whether you can eliminate underused services, such as magazines, beauty products, meal kits, and TV and movie streaming services. You may also be able to pause a subscription until you pay off your debt.
3. Assess How Much You Owe
Review all your credit card balances to determine how much you owe. Then assess your financial situation as a whole, including your budget and your financial goals. Consider both your short-term and long-term goals. To get an accurate, comprehensive picture of how much you owe, list all of your:
- Interest rates
- Payment due dates
- Minimum payment amounts
You can write this information down in a notebook or record it in a spreadsheet. Also, include a deadline by which you'd like to pay off your debt. Revisiting your budget to include your realistic expenses can help you find extra money each month that you can use to pay off the newly incurred debts.
4. Plan Your Payoff of Christmas Debt
To pay off your holiday debt, you should identify a payment strategy. Popular debt repayment methods include the avalanche method and the snowball method. With the avalanche method, you'll pay off your credit card with the highest interest rate first. With the snowball method, you'll start by paying off your smallest debt first. No matter which you choose, make sure it's manageable and one you can stick to.
5. Earn Extra Cash With a Side Job
If you've cut down your expenses as much as possible and you're still struggling to get your finances back on track, you can earn extra cash to pay down your debt by taking on a side job. Making more money is one of the best ways to pay off debt quickly and add more wiggle room to your budget.
With the prevalence of technology, there are plenty of opportunities to make money through a side hustle, even from home. For example, you can take surveys to earn extra cash right from your couch. If you're open to working outside of the home and have some extra time, you can take on a part-time job like driving for a rideshare company, serving at a restaurant, or working for delivery services.
6. Use Your Tax Return
After you file your tax return, you may find that you'll be receiving a refund. Rather than spend that money when you receive it, put it toward your debt and place any leftover funds in a savings account. You can use these savings for the next holiday season so you don't get caught in an overspending cycle every holiday season.
7. Transfer Credit Card Balances for Holiday Recovery
One of the final steps you can take to pay off debt and get your personal finances on track again is by transferring your credit card balances. You can consolidate your debt by transferring your balances to a balance transfer credit card. Consolidating can save you on interest with a 0% intro APR for a specified period.
If you want to transfer your credit card balances, look for a balance transfer credit card with a zero-interest interest APR that lasts at least 12 months. This means you can avoid paying interest while paying down your debt. Aim to pay off your debt during that zero-interest period. Make sure the amount you transfer is something you can pay off during the zero-interest period, or you could be stuck in the same cycle later.
8. Pay Credit Card Balances With a Personal loan
If you don't want to transfer your credit card balances, you can instead choose to pay your balances with a personal loan. A personal loan can be a great financing option during financial uncertainty. With a personal loan, you can:
- Get money fast
- Cover emergencies
- Address your financial needs
- Pay off balances on high-interest credit cards
Paying back your personal loan is simple with Atlas Credit. We offer repayment plans for up to 12 months with terms that are easy to understand.
Apply for a Personal Loan to Cover Holiday Spending
At Atlas Credit, we have served borrowers as a trusted lender since 1968. We opened our first office in Tyler, Texas, but since then, we have expanded to more than 50 locations throughout the state. We also serve customers in Oklahoma and Virginia. We treat our clients with respect and honesty and provide top-tier customer service.
Regardless of your specific small loan needs, our staff is ready to help. We offer a wide range of loan terms so you can get the exact loan you need. Apply for a personal loan from us at Atlas Credit today.