How to Beat Post-Holiday Financial Debt

An American Research Group survey of 1,100 adults between November 17 and November 20, 2015 found that the average person plans to spend about $882 during the 2015 holiday shopping season, about two percent more than the 2014 survey.

Between Thanksgiving and Christmas, consumers give their credit cards and bank accounts a serious beating. Many people feel obligated to buy gifts for their loved ones, sometimes at the expensive of their personal finances. This doesn’t only apply to those celebrating the holidays. Some who don’t participate in Christmas celebrations may also spend more this time of year, especially if they take advantage of sales or schedule a year-end vacation.

Even if you don’t plan to spend a lot during the holiday season, your budget might go out the window if you let your guard down and give into the desire of your eyes. If you don’t keep a watch on how much you’re spending, you can get in over your head and ring in the new year with a bunch of new debt and post-holiday financial blues.

You can avoid this scenario by coming up with—and sticking with—a spending plan prior to heading out to retail stores. But life doesn’t always work according to plan. The good news is that there are ways to beat financial blues after the holiday season.

Once the party and holiday festivities are over and you settle back into your routine, it’s time to start paying off debt and get a handle on your money.

Don’t Beat Yourself Up

Receiving your credit card statement after the holiday season can trigger a serious case of buyer’s remorse. You might beat yourself up or call yourself every ugly name in the book. It can be hard to shake the guilt that accompanies a lack of self-control and overspending, but you can’t change the past, so giving yourself a hard time isn’t going to fix the problem or make the debt disappear any quicker.

If it makes you feel better, you’re not the first or the last person to end up in this situation. We’ve all been there, including myself. Some Black Friday deals on apparel and electronics are sometimes too good to pass up, and most of us have made the mistake of spending money we don’t have. The past is the past and the best thing you can do is acknowledge the mistakes you’ve made and come up with a plan to move forward.

Take Stock of Where You Are Financially

The money you need to pay off debt incurred over the holiday season isn’t going to fall out the sky. Getting from under this burden requires disposable income. Before you can move forward, you have to assess your finances and know where you stand.

If you have a cash reserve, maybe you can afford to take money from your savings account and pay off debt. On the other hand, if you’re living paycheck to paycheck, you’ll need to revamp your budget. Write down every monthly expense and compare these expenses with your take-home income. How much do you have left after paying housing, transportation, food, utilities, insurance etc?

Don’t leave surplus funds in your checking account after paying bills, or else you risk spending this money on unimportant things. Instead, make a credit card payment, even if your credit card bill isn’t due. It doesn’t matter if it’s only a $25 or $30 payment, extra payments knock your balance down faster and reduce how much you pay in interest.

Go On a Spending Diet

If you went overboard during the holiday season buying items for yourself and family, then you probably don’t need anything for the time being, making this a perfect time to go on a spending diet.

For this type of plan to work, you must commit to only buying the stuff you need and nothing more. This is by no means easy, especially if you’re used to going out every weekend or making little impulse purchases here and there. But if you can eliminate $20 of impulse spending a week, that’s $80 a month you can put toward getting rid of your holiday debt.

Where Else Can You Cut Back?

Don’t stop with a spending diet. Take inventory of any other luxuries you’re spending money on and see where you can cut back. For example, how much are you paying for cable? A massive cable package can keep you entertained for hours, but it doesn’t make sense to spend $200 a month for cable when you’re dealing with post-holiday debt. Downgrading or canceling your service provides extra cash that you can dump on your credit card debt and get rid of balances sooner.

You can also save money by brewing your own coffee at home and cutting out expensive coffee trips, or brown-bagging your lunch. Other ways to get out the red include at-home manicures/pedicures and hair treatments, or you can pause your gym membership and save $30 to $40 a month. Some gyms will let you pause memberships for up to 90 days.

Cutting out little expenses here and there may seem pointless, but the savings adds up. If you can put $200 back into your budget every month, you can pay off a $1,000 holiday debt in about five months.

Post-holiday financial blues can strike without warning and get your new year off to a bad start. The road ahead might be rough, especially if you don’t have a lot of extra cash, but don’t let it get you down. If you stay positive, create a debt elimination plan and don’t cheat on your spending diet, you’ll save more in a short span of time than you thought possible.

Once you pay off the debt, don’t revert to your old spending habits. Instead, deposit the money you were using to pay off debt into a savings account. If you can get a jump-start on next year’s season, you won’t have to use a credit card.


This article comes from our friends at Phroogal. It was originally posted on December 14, 2015 and can be found here.

This Is How You Never Deplete Your Emergency Fund

According to a recent survey, “approximately 62% of Americans have less than $1,000 in their savings accounts and 21% don’t even have a savings account.” The reasons vary. Some people feel they can’t afford to save, whereas others downplay the importance of saving or put it off until later.

But while some households lack a sizable savings account, you might have an emergency fund for life’s unexpected surprises. It might not be a six or eight-month fund, but it’s more than the average person’s account.

Building an emergency fund from nothing takes time and effort. In fact, this might be your hardest financial challenge. But the challenge of growing a cash reserve may not compare with the willpower it takes to keep money in this account.

After sacrificing extras and luxuries to build your account, it’s tempting to dip into your emergency savings. The occasionally teeny-tiny dip may not have a huge impact in the long run, but you can run into problems if you’re unable to keep your paws off the account. It doesn’t matter if it’s been years since a “real emergency,” the worse thing you can do is deplete (or nearly deplete) your funds. The more cash you have, the easier it’ll be to survive rough times. Fortunately, there are several tricks and strategies to ensure you always have enough in the account.

1. Understand the Definition of an Emergency

It’s important to understand what an emergency is, and what it’s not. An emergency is when you need immediate funds to take care of an urgent matter. This is a situation that you can’t put off until a week or later. You need cash, and you need it now. Maybe you lost your job or can’t delay a home or car repair due to the risk of complications. Or maybe you need to pay off a creditor immediately to avoid a collection account. An emergency fund, on the other hand, is not a backup plan for when you want to have a good time with your friends or an extension of your income.

At the end of the day, it’s your money and you can do what you want. But if you start taking money from this account for non-emergencies, you may not have enough cash for a real emergency, at which point you might have to rely on credit cards.

2. Get a Separate Account for Other Expenses

Money in an emergency fund should only be used for an emergency—period. If you have other plans that require a large sum of cash, such as buying a house, a vacation, or home improvement projects, set up a separate savings account for these goals.

Understandably, your money only goes so far. What you can do is deposit half or a third of your disposable income into your emergency fund and the remaining funds into a separate savings account. This way, you can continue to grow your emergency fund while planning for other goals.

3. Don’t Make It Easy to Access the Funds

Keeping you emergency savings account in the same bank as your checking account is asking for trouble. The accounts are probably linked, which makes it easier to take money from your savings. You should keep your emergency fund as inaccessible as possible, preferably with a bank not directly tied to your checking account.

Consider opening an online-only savings account for emergency funds. You can link these accounts to a brick and mortar bank, but since it takes a couple business days to complete a transfer, having an online savings helps curtail impulse buys and needless withdrawals. This also means that you won’t have access to same-day cash in the event of an emergency, so take this into consideration before opening an online savings. However, if you’re more concerned with minimizing impulse withdrawals than same-day cash, an online savings might be the way to go. Plus, these accounts usually earn a higher yield than other types of savings accounts, helping you get a higher return on your money.

4. Don’t Stop Adding Funds to the Account

Hitting your goal of a three to six-month cash reserve doesn’t mean you should stop building your emergency fund. You don’t need to add as much to the account every month, but you’ll want to continue growing this account. You don’t want a single emergency to completely wipe out your funds. By continuing to add money to the account, you increase the likelihood of having a surplus once you take a big withdrawal.

5. Tap Your Account as a Last Resort

If you need a car repair, your first impulse might be to take money from your emergency fund. But while your vehicle needs attention, does it require immediate attention? If not, could you possibly hold off a week or longer until you receive a few more paychecks? If you save up, you might avoid tapping your emergency fund altogether.

Of course, you can always borrow from your savings and pay yourself back. But even if you have good intentions, those funds might never make it back into your account. Therefore, tap your rainy day fund as a last resort.

6. Don’t Use Your Funds to Solve Other People’s Problems

Your emergency fund is your personal financial backup plan, and not a solution to everyone else’s financial problems. It’s loving and kind to help a friend or relative going through hard times, but you have to consider the impact on your personal finances. Will helping this individual put a serious dent in your emergency fund? Do you doubt this person’s ability to pay back the funds? This is your choice, just make sure your decision isn’t entirely based on emotions. As a rule of thumb, only lend what you can afford to lose.

An emergency fund can help you get through the roughest financial patches in your life. But along with growing a fund, you need to preserve it. If you haven’t begun saving, now’s the time to get serious. Commit to paying yourself first and save every windfall you receive. And if you already have an emergency fund, never stop funding to this account.


This article came from our friends at Phroogal and can be found on their website here.