If you’re anything like me, you’re still recovering from a January slump in finances. It happens to a lot of people, and the experts even have a name for it: a “holiday debt hangover.” You’re not alone, the holidays get the better of all of us. We take time off work, and at the same time overspend. In the grips of the January blues, many would rather not face the reality of our situation. We avoid statements and log out of online banking.
Before you know it, February has come and gone, and finances are still not moving. You start to feel like you are behind before the year has even started, like Usain Bolt in this race against Kevin Hart. You know you could win if given a fair start, but you are already playing catch-up.
The recovery begins now! It’s time to start living frugally again. Leave the holiday period, which can be a lavish time, a time for eating and drinking and giving without prejudice. It’s time to come back to reality and stay within budget. Only spend what you can afford and reduce unnecessary costs and spending.
Take stock of your situation. This is a necessary step to recovering from the January slump. Be honest with yourself about how much money you have, how much your business earns, your assets and your outgoings. Understand and accept your situation.
Next, set up a budgeting plan. You can do this yourself using one of many online templates or seek the guidance of an expert if needed. Offset your financial obligations against your earnings to see how much income you have at your disposal. The more accurate and realistic you can be, the better.
If you have accumulated debt over the holiday period, you also need to be honest with yourself about that. Don’t add any more debt to the pile, even if it means hiding or cutting up your credit cards. Just pay with a debit card or cash and try to spend according to your budget.
Set up repayments for your debts based on what you can afford. It can be tempting to pay back the minimum on everything, but this means that you only end up paying off the interest and not the balance. Pay back more if you can and focus on the higher interest debt first. If you have small debts, then you might want to pay them off quickly for a psychological victory. Always seek help if your debts become too much to handle.
Finally, start setting SMART goals based on your situation and financial goals. They should be specific, measurable, attainable, realistic and time-sensitive, but also personal to you. Do you want to pay off a specific amount of debt? Generate a new stream of income? Or start saving a specific amount per month? You can look back and adjust your goals as you are going along.
January is, for many people, a tough month financially. After time off and increased spending over the holidays, we often find ourselves spending most of the beginning months of the year trying to catch up and get back on track. Now is the time to take back control of your finances. No more overspending, no more pretending, just solid planning and action!