Christmas will come and go. It’s a reality. If you’ve spent the holiday running up your credit card bill, pay day is coming. Maybe you’re just in a financial mess altogether, and you know it’s time to make a change. Starting the new year off right could mean all the difference in the world. Here are some tips to getting your money right after Christmas.
Determine what your debts are. This is probably the first and most important thing you should do after Christmas. If you’ve been using your credit cards during the holiday your balances have increased. Your minimum payments have also increased. It’s time to sit down and figure out exactly what you owe. Make a list of all your debts. I like the idea of listing them from smallest to largest. Determine what your total debt is and then post your list somewhere where it will be visible.
Establish an emergency fund. Many people struggle because they have no savings. Now that Christmas has passed save up a nest egg for a rainy day. Even if it’s just a few hundred dollars, having an emergency fund will give you some space between you and ‘life.’ If an emergency comes up, and they will, you won’t have to rely on your credit card to get you though. Add to you fund as you began to see traction on your goal of getting out of debt.
Stop using credit cards. If you want to get your finances together, you’ve got to commit yourself to stop using credit cards. At least for a period of time you’ve got to stop buying things on credit. When your money is ‘right’ then you may be able to use credit again moderation. But if you want to get your finances together, you’ve got to stop using credit for a period of time.
Start paying off your debts. Now that you have some money saved up, and you’ve committed to stop using credit, lets start paying off your debts. There are lots of ways to approach this. One theory says pay off the smallest debts first. Another theory says pay off the card with the highest interest rate first. As long as you are paying something off, who really cares? Just get busy getting rid of the debts!
Begin thinking long term. You’ve got to think about more than just the immediate future. How will you develop bigger savings? What are your plans for retirement savings? What will you do for making major purchases like cars, houses and major household items. You’ve got to think into the future to avoid reverting back to your old and bad habits. A lack of a plan for the future, could send you back into a land of debt.
Make this the year that you get your money together after Christmas. Don’t let your new year continue on a downward financial spiral.