January can be the most financially difficult month of the year. After intense spending accumulated over the holiday season, January is the time to catch your breath and dig yourself out of the holiday debt. Most years yield the same result, the intention to spend less but in actuality you spend more. It can be hard to contain yourself when shopping for those that you love and many adopt the thinking of “I’ll figure it out later.” Well, it is now later, and you might be struggling to figure out your bill payments. Here are three tips on how you can achieve financial security after the holidays.
Review Your Debts
Knowing exactly what you owe is the first step to recovering from debt. If you turn a blind eye and refuse to open credit card statements because you are nervous what they will tell you, you will not escape the debt process anytime soon. Review every single credit card and line of credit debt that you owe and make note of each amount owing. You can’t hide from your debt. If you don’t know your debt load, you can’t take pride in chipping away at it bit by bit each month.
Set Savings Goals
Debt repayment should always be the first priority, as you will always lose more on interest out than you will gain on interest in with a savings account or investment fund. As you begin to manage your debt, start thinking about your savings goals. First, you should have enough set aside in an emergency fund to cover approximately six months of living. This will protect you if you need car repairs, your washing machine breaks, or you lose your job. After your emergency fund, start thinking about bigger goals like saving for retirement, for your children’s education, for a down payment on a house, or just start saving for a winter vacation. When you have a goal, it’s a lot easier to sock away money.
Review Your Bank Accounts Daily
With online banking this is an incredibly easy task to complete. Take a moment every single day to look at your bank activity. When you review your chequing account or your credit card activity daily, you are reminded of where you are spending your money. Perhaps you’re spending more on fast food than you initially thought and it can be something to cut out of your spending habits to allow for more debt repayment. Being mindful of your daily bank account balances will arm you with the knowledge of your spending and provide you with your financial big picture. It also holds you a bit more accountable. Knowing you will have to confront that takeaway lunch or extra shirt on your balance sheet at the end of the day, do you still want to splurge?
Set Aside Monthly Expenses
Every month you are bound to have expenses that are non-negotiable and unavoidable. Things such as rent/mortgage, cell phone bills, utility bills and insurance. Every time you get a pay cheque take out all of the money you will require for these bills and set it aside in a separate bank account, away from your daily spending account. This will ensure that you always have enough money to pay your necessary bills and will give you an idea of how much is left for your debt repayment and fun money.
Recovering financially after the holidays is not the easiest thing to accomplish, and you may need to sacrifice some of your comfort items in order to allot for higher debt repayment. But with a certain amount of determination and dedication, you will be able to pull yourself out of your holiday debt and repair your financial situation for the New Year.
