The average American spends $929 on holiday gifts each year – and that’s just the beginning. Add in special foods and treats, travel to parties and celebrations, lights, and decorations, and it’s easy to get caught up in a “‘Tis the season” mindset. Buy, and indulge, now. Pay later. But like that second (and third and fourth) glass of eggnog, your merry spending spree can result in a painful post-holiday debt hangover. So, what’s the cure?


Easing the Pain of Post-Holiday Debt

Some people try to cure a hangover with a little “hair of the dog.” Dubious, at best. When it Budgeting After the Holidays | Divorce Helpercomes to a spending hangover, it really doesn’t work. Stop spending. Go on a little “financial fast”: that is, curb any unnecessary purchases (i.e. stick to essentials only – food, rent/mortgage, utilities, etc.).

Switch to cash to give your credit card a chance to cool down, and keep track of your purchases on a spreadsheet or simple piece of paper to help you see areas where you can cut back.

This is not about living a spartan lifestyle; rather, it’s about taking a break from the excesses of the holiday season.


Tip: Super-charge this step by putting some (or all) of the money you save on your credit cards. For example, if you normally go out for dinner and drinks on Friday, put that $100 towards your debt. This is an incredibly powerful way to start rebuilding your credit after the holidays. You can still have fun: have friends over for a binge-session of House of Cards or host a game night. Free, and fun.


Open Those Bills

It can be difficult to open your bills and statements. Do it anyway. Make a list of all your debts, as well as minimumbudgeting after the holidays | Divorce Helper payments, interest rates, and duedates. This will give you a big picture view of your debts. Plot it out on a calendar or spreadsheet. And breathe: millions of people are in the same situation. But you don’t have to stay there.

Now, prioritize your debt. For example, you may have a student loan, a big credit card bill, and a vacation fund. Put your frivolous fund on hold for a while. Not forever – but until you’ve rebuilt your credit. Now turn to your debt: your student loan may have an interest rate of 5%, while the credit card runs about 22%. Consider making the minimum on your student loan and working on your credit card. Try to eliminate the high-interest debt first.

Is this always the best course of action? Not always. Say you owe a few hundred dollars on your student loan (wishful thinking, but go with the example!) and a few thousand on your credit card. If you can pay off that student loan completely in a few months, go for it. But don’t stop there. Apply the money you were paying on that debt to your credit card. You will pay off that high-interest debt much more quickly.


Keep Working – And Make a Plan

Chip away at your debt and use income strategically. For example, if you have more overtime than usual or you got an annual pay bump, apply that to your post-holiday debt. If you receive a tax return, instead of purchasing that giant flat screen you’ve been eyeing, consider making a big payment on a credit card or loan. This can mean sacrificing a few wants, but in the long-run,  you will achieve financial freedom.

And, as Robert Manning, author of “Credit Card Nation — The Consequences of America’s Addiction to Credit,” says: “The debt industry — and it is an industry — has persuaded people that their ‘wants’ are ‘needs’ and that if you really care for someone, you’ll spend more money on them. They tell you it’s so easy, just use plastic. But they don’t tell you how it will hurt, in mounting debt and higher interest rates and higher fees.”

Learning to distinguish wants and needs can be difficult; but it is worth it. You begin to gain traction as you’re rebuilding credit after the holidays.


Most importantly, apply these lessons next holiday season. Figure out what you spent. Was it reasonable? Where could you cut back? For example, rather than hosting a multi-course meal, why not have a potluck or a buffet with less pricey, time-intensive offerings? Did you make impulse purchases? Try a list next year. Just taking time to consider these issues can help you get back in control of your spending.


Try setting aside some money each month for a holiday fund, and if you can’t spend as much as you did last year, fine! It’s ok. A few days of excess can take months to correct. Gifts don’t equal love. When you care, you can show it without spending a fortune. Homemade presents or clearance aisle gifts (bought in July, you savvy shopper) are just as meaningful.
Post-holiday debt isn’t nearly as fun as the spending! But when you take clear and consistent steps, rebuilding credit after the holidays is manageable.


Budgeting after the holidays | Divorce Helper

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