Broke After Black Friday? Get your Finances Back on Track for the New Year
If you’re dealing with a holiday spending hangover after recent Black Friday and Cyber Monday sales, you aren’t alone. In fact, the Experian Holiday Shopping Survey has revealed that up to 60% of adults admitted that this type of shopping places immense strain on their finances.
Getting your finances back on track may seem impossible, but it need not be if you implement the following budgeting tips:
Review your Spending
This is the first and most crucial step to take. Review credit and debit card statements and check to see how much you spent from savings, while also listing the categories where you spent your money – such as food, gifts, entertainment, clothing or gadgets. This will allow you to see where you’ve spent your money, which in turn gives you a good starting point for rebuilding your savings and repaying the debt.
List Everything You Owe
After seeing where you spent your money on Black Friday and Cyber Money, you’ll need to face reality by listing each debt that has been incurred. When doing this, specify the total amount owing, minimum required payments for each debt and the interest rate being charged on them.
Pay more than the Minimum Required Amounts
Credit card companies conveniently display the amount of time to pay off your balance and the full amount of interest if you only repay the minimum required amount each month. However, remember that any savings on your purchases will be negated if you only pay back the minimum amount required each month. As such, you should do everything possible to pay a little extra each month – even if it’s only $10 or $15.
Consider the Snowball Repayment Method
After listing your debts, start by applying as much extra money as you can afford to the one that you owe the least on – while paying minimum required amounts on the balance temporarily. This will help get it repaid a lot sooner. Once this debt has been fully repaid, take the amount you were paying on it and add it to the amount you’ve been paying on your next largest debt and so on.
This strategy will not only help get your debts repaid; you’ll enjoy a sense of victory as you see each one of them slowly disappearing. An added advantage of this method is that by adding amounts to larger debts that were being repaid on smaller amounts will help get them repaid far quicker.
An alternative approach to this is to repay the debts that are carrying the highest amounts of interest first. However, it may take you longer to start seeing progress this way.
Getting your holiday debts repaid will allow you to start focusing on saving money because any amounts that were being paid towards outstanding bills can now be placed into a savings or investment account instead. If you’d like to obtain more advice regarding getting your finances in order, contact our team today.