The holidays may be over but for many Americans their financial impact remains. More than a third of consumers took on holiday debt at the end of last year, racking up an average balance of $1,249 to pay for gifts, travel and entertainment, according to holiday spending statistics from LendingTree.
In addition to using credit cards to pay for holiday festivities this year, some Americans turned to personal loans or buy now, pay later financing. If you’re among those facing a holiday spending hangover this month, follow these tips to get it under control:
Don’t Beat Yourself Up
Sometimes debt can feel overwhelming and lead to anxiety or additional stress. That’s normal but you can’t change the past, so try to let go of any negative feelings you have about your spending in the past and focus on the actions you’re taking now — and going forward — to rectify the situation.
If being in debt makes you feel uncomfortable, take note. That can be a powerful tool to help you when you make financial choices going forward.
“It is important to recognize the anxiety overspending may cause now, so you can take action not to have it happen again and feel confident in the decisions you’ll make not to have it happen again,” Geoffrey Owen, certified financial planner with Front Porch Financial Advisory in Charlotte, North Carolina, says.
[Read: Inside the Psychology of Overspending and How to Stop.]
Take Stock of Your Situation
Figure out the total amount of what you owe and the minimum payments — and interest rates — for each account. From there, you can plan how to approach the debt. Directing extra cash toward the highest-interest debt first will cost you the least in the long run, but it can also feel satisfying to pay down the smallest balance debt and eliminate it completely.
Factor the Payments Into Your Budget
Once you’ve decided which approach you’re going to take, create a new budget that takes those payments into account. That might require cutting back spending in other areas temporarily. You may also want to switch to using cash and debit cards for the time being so you’re not adding to existing balances while you’re paying them off.
Rob Greenman, CFP with Vista Capital Partners in Portland, Oregon, suggests committing your plan to writing.
“If you write it down and have something you can methodically execute, the chance of you succeeding in your goal is significantly higher,” he says. “If you don’t have a game plan, it’s likely to start snowballing.”
[Read: How to Create and Maintain a Family Budget.]
Consider a Side Gig to Pay Down Debt Faster
If you’ve cut your expenses as much as possible and still aren’t making a big dent in your payments, you might want to look for ways to earn some additional income. Side gigs like driving for a ride-sharing service, pet sitting or selling items online could generate extra cash that helps you hit your debt repayment goals faster.
[SEE: 15 Best Websites to Make Money Online.]
Make a Plan for Next Year Now
Now that you’ve figured out how to cut your budget and earn extra income, consider putting some of that extra cash (once your debt is paid off) into a holiday fund for next year. That way, by the time Black Friday comes around you’ll have extra cash ready and won’t have to go into debt to enjoy the season.
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Spent Too Much on the Holidays? Here’s How to Manage a Holiday Debt Hangover originally appeared on usnews.com
