We’ve All Been There
We’ve all been there. You get into the spirit of giving and throw your budget out the window. All of a sudden, you are scratching your head, trying to figure out how your credit card bill is so high. Your brain starts to go over all possible scenarios... It must be a mistake!? I know, there must have been fraud on my card! However, once you admit that neither of those things happened, it’s time to face the music. Just remember that the sooner you do, the sooner you’ll be back on your investment journey. Keep reading to learn the top 3 ways to help with holiday debt.
Here are the Top 3 Ways to Help with your Holiday Debt:
#1 Create a Budget
Create a budget. I know it’s hard. I know that a lot of people (including myself) don’t get paid a consistent amount of money every two weeks. Just remember that a budget is a dynamic document that is ever-changing. It will never be perfect. You have to estimate your spending at the beginning and tweak as you go along. Be prepared to be flexible.
#2 Use Cash
Use cash. I can’t stress this one enough. Using credit cards is very convenient and super easy, and that’s why they can be very dangerous when you are trying to use a budget. You can easily overspend with a credit card due to the fact that it is so easy to hit “buy” or “add to shopping cart” on Amazon. With cash, if you open your wallet and it’s empty... that’s it. You’d have to go to a bank machine to take out more cash, and hopefully, that will be enough time for you to come to your senses.
#3 Pay Off the Highest Interest Rate First
Pay off the highest interest rate first. Now I’ve noticed that the school of thought on this one has changed in recent years. Some say that you should pay off the debt with the lowest balance first. Either one is fine, but the piece that I would add to this is to make sure you are still adding money to an emergency fund as well. There is nothing worse than going full tilt on a loan without adding to an emergency fund, then having an unexpected bill wipe out all the hard work you did because you didn’t have anything in your emergency fund.
We all have road bumps on our investment journey. It’s fun to buy things for people that we love. First, don’t beat yourself up. Just breathe and get back on the horse by creating a budget, moving to cash, and tackling the highest interest rate first.
