After challenging year of inflation that affected everything from gas to food prices, many people (ironically) turned to retail therapy. Even if you’re not a chronic overspender, the fact is that things just cost more right now, as evidenced by the credit card bill after holiday shopping season ended.
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Financial experts recommend you don’t chastise yourself or feel too bad about it; instead, simply tackle it. In the wake of too much money going out, the new year is a great time to revisit and refresh your finances and figure out a recovery strategy to bring your finances back into balance. Here are five tips for coming back from overspending.
Face the Music
After the last traces of that holiday gift wrap is in the trash and the new year has dawned, your first step is to take an honest look at where you’re at financially. Gather all your statements from credit cards and shopping accounts or just add up the numbers from a checking account statement and determine: How much did you actually spend; how much of that is in the form of debt; how much money do you have coming in? When you know where you stand, it’s that much easier to get a handle on what to do next.
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Stop Spending and Cut Back
Sometimes, overspending becomes a habit. Maybe you’re used to packages coming in the mail every week or being able to click “add to cart” with the press of a key. But in order to truly recover from a holiday overspend, you may also need to cut back on expenditures you’ve gotten used to: extra streaming or subscription services, take-out, new makeup or electronics.
Set a New Budget
The new year is the perfect time to reassess your old budget and set a fresh new one for 2023 that will not only help you get ahead of debts but save money, too. Try to set a realistic budget, one that really takes into account your lifestyle and needs, as well as income.
Pay Off Holiday Debt
If you did amass holiday debt, you want to pay that debt down as quickly as you can, so you don’t start off behind in in the new year. Paying more than the minimum balance as often as you can will help bring that holiday debt down quickly. If possible, look for credit card offers that allow for no-interest balance transfers or a lower percentage rate than your existing card.
Plan Ahead for the 2023 Holidays
To make sure you don’t find yourself in the same situation at the end of this year again, consider putting money aside ahead of time every month into a holiday savings account just for that. Then, you’ll have an automatic budget for your holiday spending in 2023, sitting in an easy-to-access savings account.
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This article originally appeared on GOBankingRates.com: How To Pay Down Debt and Rebuild Savings After Holiday Overspending
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