Summertime is ideal for kicking back and unwinding. If you’re not careful, though, that same easygoing attitude can take a serious toll on your finances. Whether it’s barreling ahead with extravagant vacation plans or enjoying too many meals out, the result is often the same: a bruised bank account and perhaps some freshly accumulated credit card debt.
The good news is that recovering from summer splurges doesn’t require some complex algorithm. It’s mostly a matter of knowing which steps to take to remedy the situation. Here are four to get you started.
1. Eliminate debt.
Once you’ve swiped your credit card, there’s often no going back — you can’t exactly return a decadent meal at a four-star restaurant or a weeklong trip to Europe. You can, however, make it a priority to pay your credit card bills in full and on time, starting with those cards with the highest interest rates. Doing so will reduce the long-term impact of excessive summer spending. In the meantime, avoid racking up additional debt by leaving your plastic at home when going out.
As of July, the average debt-carrying household owes $15,863 in unpaid credit card balances, according to NerdWallet data. That kind of debt can lead to a dip in your credit score, which, in turn, will make it more difficult to qualify for good rates on loans. It could even stand in the way of landing a new apartment or lead to higher insurance premiums.
You may need to make certain sacrifices in order to free up the cash required to slash your debt. So be it. Ten years from now, you won’t regret taking one or two fewer trips to the mall every month, but you will kick yourself if you don’t get out of debt.
2. Adjust your budget.
If you’re finding it difficult to pay your credit card bills, you may want to adjust your budget. Take a close look at your expected monthly expenses, and try to figure out which are essential and which you could live without. That doesn’t necessarily mean making drastic changes that dramatically reduce your quality of life. It’s about making tweaks that are sustainable and straightforward.
For one, start drawing up weekly meal plans. That way, you won’t be forced to eat out when you realize that there’s nothing left in the fridge. Consider carpooling or relying on public transportation to cut down on money spent at the pump. If you can muster the inner strength to downgrade your cable subscription, go for it. The more of these kinds of adjustments you can make, the better.
3. Bolster your bank account.
If adjusting your budget isn’t having the desired effect, you’ll need to supplement your current income. Although that’s easier said than done, it’s worth giving a shot.
Try requesting a few more shifts per week or putting in some overtime hours. You may also want to put out feelers for a part-time job on the weekend or evenings. Remember: When it comes to plastic with high rates, every dollar counts, and an extra hour or two of work here or there will help you tackle your debt before it spirals out of control.
With that in mind, roll up your sleeves and get creative. Sort through your belongings and organize a good old-fashioned garage sale. If you usually receive large tax refunds, adjust your withholdings on your W-4 form to increase your take-home pay. Simply fill out and file the updated form with your employer.
4. Analyze missteps.
Once you’ve started chipping away at your debt, figure out where your spending went awry. That should help you avoid repeating the same mistakes in the future.
Consider taking it one step further by setting a budget for next summer and creating a savings plan for those expenses. Setting aside some savings in the next few months — be it in a certificate of deposit or a traditional savings account — means you won’t be tempted to max out your credit cards a year from now, and it can even get you some returns on that cash.
The Bottom Line
That financial hole you’ve dug yourself into isn’t as deep as it feels, but you should still make every effort to get out of it. That begins with reducing your credit card debt, adjusting your budget and trying to find additional sources of income. Once you’ve made some progress, start saving money for next summer so that you don’t find yourself in a similar situation a year from now.
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4 Ways to Recover From Summer Overspending originally appeared on usnews.com
