Did you wake up on New Year’s Day with more than just a pounding headache from that extra glass of champagne you drank? The effects of overspending and letting your money management slide can also leave you feeling a little worse for wear, financially speaking.
If you’ve hit the plastic a little too hard and let things slide in the excitement of the holidays, January can bring a lot of stress with it.
Face it: It’s time to put yourself on a financial detox. It’s not as hard as it sounds — just follow these simple steps.
1. Prioritize Your Debt
You know the feeling when you wake up after a night of partying? Surrounded by piles of empty bottles and confetti blanketing your carpet, it can seem like you’ll never get your house looking normal again.
You might feel the same way when it comes to addressing your debt. If you’ve got a number of outstanding loans, credit cards and store cards all demanding payment, it can be hard to know where to start.
Just as with cleaning your living room, the best thing is to just get in there and start going (OK, maybe have a grilled cheese first). Whether you decide to snowball your debts or pay off the highest interest first, the key is to decide on a strategy to pay off your debt and then commit to throwing as much money as you can at it until it’s all paid off.
2. Work Out Your Essentials
When you’re working on getting your budget back on track, you’ll want to take some time to review your expenses and work out where you can cut back. Sure, you might have overindulged in December. But a little slip up doesn’t mean you have to let your whole budget lapse in 2015.
Start by going through your regular expenses and working out what’s really essential. Electricity and gas? Yep. Netflix and your beauty box subscription? Maybe not. Oh and don’t forget about that gym membership you signed up for last January and stopped visiting in March. Go through each item on your statement and ask yourself if it’s really the best use of your money.
Now is also a great time to call your providers and see if you can negotiate a better deal on your essentials. Ask your bank if you’re getting the best rate for your mortgage. Haggle with your utilities and shop around when it comes to your insurance. Don’t be afraid to ask for a bigger discount if you’ve been loyal to one company for years.
3. Put Yourself on a Cash-Only Diet
Money seems to flow like wine during the holiday season — and it seems to disappear even faster when all it takes is a little wave of the plastic to spend.
There is some evidence that you spend less when using cash as opposed to a credit or debit card. Something about actually seeing the money leave your wallet makes you more critical about what you are buying.
So if you need to get your budget back on track, put yourself on a cash-only diet for a month or two. Of course, there’ll be some things you’ll have to pay electronically — like your rent or mortgage, and utilities. But for everything else, take out only what you have budgeted to spend in cash, place it in an envelope and spend from there. You’ll come away with a better appreciation of where your money actually goes, and you’ll stick to your budget a lot better than if you were just mindlessly swiping a card.
4. Claim Your Missing Money
What’s just as helpful as saving money? Unexpectedly finding extra money that you didn’t even know you had.
The government currently holds more than $58 billion in missing funds belonging to U.S. residents. This could be from bank accounts that have been left dormant, old investment funds, uncashed paychecks, insurance policies or utility deposits.
It’s a fairly easy to process to search for your missing funds, although you will need to go to a couple of different websites as there is no central database. We compiled a list of the best websites to claim missing money.
5. Start Saving for Next Year’s Holidays Now
If a budget blowout at Christmas time is as common to you as eggnog, why not try something a little different this year. You can avoid a holiday spending hangover altogether if you start proactively planning for next year’s holidays now.
Sure, it seems a little to early to start thinking about next December when you’re still trying to work off the extra pounds you gained last month. But if you start putting away money now, you’ll have a nice stash of savings by the time the holidays roll around again. Even $20 a week could add up to over $1,000 if you start saving now for December.
A number of credit unions and banks offer holiday club savings accounts to encourage you to save for the season. Another option is to open an online savings account — many online banks will allow you to have multiple sub-accounts for different purposes through the same portal. The idea is to sock your savings away in a dedicated place just for holiday spending. That way you won’t be tempted to spend it throughout the year and can enjoy a more financially festive holiday next time.
Photo credit: Aris Sánchez