Christmas. Ouch. Has anyone else opened up their bank account and seen an unexpected blow from the holiday season?
Forget about the alcohol, I’m currently reeling from a festive hangover.
Where I once had the very beginnings of a baby nest egg in my bank account, I now have a big, fat nothing (not quite, but it feels like it). Stress shopping, end of year sales, the Southern Hemisphere Wedding season, Christmas and two trips to New Zealand in the space of three weeks have added up to a very depressing start to 2018. I feel like rolling on the couch and indulging in the financial equivalent of Hair of the Dog (denial shopping, anyone?) I mean, it can’t get worse, can it?
But of course, it could get worse. If I ignore the situation I’ve gotten myself into (and believe me, I badly want to ignore it), I could quickly find myself moving from little savings, to no savings at all. I’ve been that person using trying to split a 7-eleven $1 coffee between cash and card – I don’t want to be back there again. Since I figure I’m not the only one to have landed themselves in this sticky situation, I thought I would share the steps I’m planning to take to get out of it. It won’t be pretty, but it will be worth it.
1. Accept the situation
It’s time to stop kidding around. The truth of the matter is that I knew I was overspending, and you probably did too. Even now, I can’t really believe that the plummeting figures in my account are really something that I could do anything about. Since Christmas I’ve even placed a few more orders for things that I ‘most definitely need’ or ‘shouldn’t really miss out on at that price’. Until I sit and spend some serious time contemplating how much further away I am from my financial goals, those accidental spends are going to continue, so it’s time to cut them off at the knees.
2. Move money around if you need to
Does anyone remember the number one rule of credit card ownership?
Thou shalt never let the credit card win
In other words- you pay that baby off –in full– every month. If you can’t afford to pay it off, you can’t afford to have the card. Since my credit card bill is going to be a lot higher than it should be this month, and I don’t want to find myself in a situation where I don’t have a cash buffer to hand, I need to get that money from somewhere else. Fortunately, I’ve spent the last year tucking money away into my trusty Acorns account, and I can withdraw what I need to to make ends meet- it may hurt to see my investments decrease, but not as much as it would to be paying the bank all that extra money in interest.
If you haven’t been using Acorns or something similar, this is the point where you’re going to want to crack open that piggy-bank or turn those couch cushions upside down – anything you have to do to pay what you owe. If you’ve managed to get into a situation where you can’t pay off that credit card, then the situation may be a little bit bigger than just a costly festive season and it’s time to consider more serious financial advice
3. Cut the card
Seriously. Cut the card. According to a study published in the Journal of Experimental Psychology, credit card users have been proved time and time again to have less control of their spending. Not only are you like to spend more if you’re putting it on the card, you’re also making poorer purchasing decisions, and enjoying your purchase less than if you had opted to pay in cash. While I’m a huge fan of collecting rewards points to pay for the pricier things in life, now is not the time to be worried about that. Cut the card, and go old-school by using cash or a debit card to keep your spending under control.
4. Revisit your budget
Some things in my budget are essential- rent, power, train tickets. Some things are a little…less essential (money for haircuts, show tickets or other splurges). Comb through your budget to see where you can cut corners until you’re back on firmer financial ground. Once you’ve decided how much you can realistically survive on, take that cash out and stick to it!
5. Hustle, baby
Finances are simple- Money In vs. Money Out. If your Money Out has shot up as much as mine has, the only thing you can do to balance it out is to increase your Money In. As a mostly-casual worker, I’m going to be gritting my teeth and picking up every extra shift I can for the next few weeks. It’s time max out that income until you’ve recovered lost ground. You can do it!