Happy New Year, Tiff!
I capital-L Love the holidays. The holiday cheer, the holiday food, the holiday gifts. I have a large social network and my love language is giving gifts. I love the challenge of finding just the right gift for everyone on my list—and the thrill of watching them open the gifts that I spent a lot of time finding for them personally. It’s a labor of love, and I love the labor. The only problem is that I spent way too much money this year. I don’t regret it, but now I’m struggling to find a way to get back on track. Do you have any ideas?
—(Mostly) No Regrets
Happy New Year, No Regrets!
It’s great that you are looking to get back on track. Not only will this set you up for financial success in 2020, but it can also set you up for financial success for the rest of the decade. Holiday bills can be overwhelming for anyone, but I have a few tips I think can help you.
I love that you love spending money on your loved ones, but—and I know this is going to be a hard but for you—it’s not worth it if you can’t afford it. This doesn’t mean you have to stop buying presents for others, but it does mean that you need to start being a bit more strategic about it.
First things first, you need to stop spending money on things you—and your loved ones—don’t really need. As you buy gifts for your loved ones, consider what they really need as well as what they want. Same goes for shopping for yourself! It can be easy to get into the routine of buying the to-die-for deal we see online, sure that it’s the perfect gift for ourselves or someone else. With so many deals flying around during the holidays, it’s easy to get programmed to buy. Before you make a purchase going forward, really think it over. Do you really need it? Does your friend really need this? Will buying it help you achieve your short-term and long-term financial goals?
Personally, it helps me if I wait a day to make a purchase. Nine times out of ten I won’t make the purchase if I wait a day. Keep in mind that the advertiser’s objective is to get you to enter in your credit card info ASAP. Giving yourself time to make the purchase will allow you to decide if this is something you should really buy.
Review Your Finances
“I can’t wait to look over all of my bills and create a
budget! This is going to be so much fun!”
—No One, Ever
As dreadful, boring, scary, (insert your own adjective here) as reviewing your finances can be, you need to do it. You need to figure out where you are so you know what areas to improve upon. Take a hard look at how much you spent on gifts for others. Don’t just look at the amounts. Think about why you spent what you did, too. Did you overspend on a gift for a coworker you’re trying to impress? Does your mother-in-law really need a whole new set of dishes? Did you end up buying three gifts for your best friend because you forgot about the first two? Take a look at your spending habits holistically to understand where you can cut back. If there are other areas of your life where you find yourself overspending, do this exercise for those areas as well.
The more you want to avoid taking inventory of your finances, the more you probably need to do this. I know it can feel easier to avoid altogether, but how are you going to improve it you don’t bite the bullet and take this step? Your future self will thank you for it. And after sticking to a plan, you will be able to measure your results and see how far you have come.
Create a budget that you can stick to. If you haven’t used a budget in the past, keep in mind that you will have to make adjustments in order to create a budget that works for you. Here’s a great article on Credit.com that explains the steps to create a budget.
Now is a good time to think about how much you want to spend next holiday season to prevent overspending at the end of the year. It’s a lot easier to break it up now rather than having to come up with all the money you’d like to spend on gifts using the two or three paychecks during the holiday season. Go over your list and determine how much you can reasonably spend on each person on your list.
If you start saving $100 per paycheck now (and get paid twice a month), you will have nearly $2,000 to spend on gifts for your loved ones this holiday season. If that isn’t enough to cover all the gifts you want to buy, start budgeting more until it works for you and the rest of your needs. If you can’t afford to save $100 each paycheck for future gifts, then you can’t afford to spend that much during the holidays either.
Start Paying Down Debt
It sounds like you spent enough to get into a bit of debt over the holidays. If that’s the case, let’s figure out an action plan to start paying down that debt now. There are several methods you can use to go about this. This article on Credit.com has several ideas on ways to pay off credit card debt. In addition to those, I have a few other ideas that might work for you.
If you are planning to get a tax return, use that money to pay off debt. It won’t be as exciting as spending the money on a shopping spree or exotic vacation, but it will feel great when you have less debt to worry about.
If you get paid every two weeks, there are two months each year when you get three paychecks. Use the third paycheck during those two months to pay off debt. January and July 2020 will likely be the two months where you get paid three times during the month.
If you get a new year bonus at work, consider putting those funds toward your debt. The more debt you can pay down and the faster you can do it, the sooner you will be back on track and living with more financial freedom. Similarly, if you get a raise, put the additional funds toward your debt until it’s paid off.
No Spend November, Meet #FrugalFebruary
No Spend November has been gaining popularity over the last few years as holiday spending has continued to increase. During No Spend November, you spend money only on essential items as a way to financially prepare for the holidays. I propose a new month: Frugal February. Similar to No Spend November, #FrugalFebruary will help you recover from your holiday spending and financially prepare you for the rest of the year. To participate in #FrugalFebruary, just create a do-not-spend list. Items on this list could include Starbucks, dining out, makeup, clothes. If something is on your do-not-spend list, you don’t buy it during your no-spend period.
Now this doesn’t mean that once the no-spend period is over you can go buy everything you didn’t during the no-spend period. Only buy things when they need to be replaced. Once you’ve gotten in the habit of not spending your money, it will hopefully be easier to continue being more frugal.
This method can be hard since it can feel like you are missing out—FOMO is real, I know! But it’s important to remember why you are doing this. It might even help to make a list of why you are doing this in the first place before you start. You’re being frugal now so you can shower your loved ones with presents later. If your priorities change, great! Being frugal now will help you meet whatever financial goals you set for yourself.
And maybe a no-spend period for a whole month won’t work for you and that’s okay. Maybe a no-spend weekend will work. Or every Monday. Some people will eat in for the last week of each month to avoid spending money. Get inspiration online and see what others have done and how much they were able to save during their no-spend periods.
You Can Do It!
Remember to have realistic goals as you go through this journey. If you create an action plan that you can’t stick to, then you are only going to feel more defeated when you can’t stick to it. It’s better to make small, achievable goals. You have to start somewhere. Start here—and start now—and you’ll be thanking yourself later.
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Disclaimer: Credit Tips with Tiff provides credit tips and suggestions for you to make the most of your money. Given the quantity of questions we receive daily, we are able to answer only select questions. Your email is not guaranteed a response. We reserve the right to edit and publish any questions we receive. If your question is chosen, your identity will remain anonymous. We are not financial experts. If you are in need of specific financial help, please seek the advice of a professional.