Once the holidays are over, January feels a little different. The party is over, the debts are paid, and you may feel like you have nothing to look forward to.
Financial experts say the impact may be minimized through turnaround plans and other steps.
“Financial stress can be temporary,” says Tonya Rapley, financial educator and founder of the millennial money and lifestyle blog My Fab Finance.
She suggests focusing on small steps, like paying this month’s bills, and telling yourself you can make up for December’s overspending.
Here are some more ways to combat the financial downturn this month.
Create or update a budget
Mike Croxon, chief executive of the National Credit Counseling Foundation, a nonprofit financial coaching organization, says the new year is a great time to create or update a budget, which gives you a sense of control. He says he can get it back.
For example, the popular 50/30/20 budget suggests spending 50 percent of your income on needs, 30 percent on wants, and 20 percent on savings and debt payments.
You can adjust these percentages as needed, especially if you live in an urban area where housing costs are high.
“The best way to take back control is to have a plan,” Croxon says.
“We can get through this and get back to being financially happy.”
repay a debt
With interest rates higher than they were a few years ago, credit card debt is also becoming more expensive, making paying it off a financial priority.
How exactly you do that is up to you, Croxon says.
“While it’s most common sense to pay off your highest interest rate balance first, for some people it’s most important to pay off the lowest amount first because it makes them feel like they’ve accomplished something,” Croxon said. says.
Small wins can provide momentum to continue.
Online calculators for these two methods can help you stay on track.
Track your payments carefully
Christine Alemany, chief marketing officer at i2c, a global banking and payments platform, said she is using “buy now, pay later” to buy holiday gifts, which lets shoppers split payments into multiple installments. If you make purchases, it says it’s important to be careful about when those invoices are due.
Alemany suggests using a financial management tool or spreadsheet to track BNPL due dates to avoid late fees and interest.
“Consumers now have a variety of payment options and the option to choose what works best for them, but that convenience must be balanced with discipline,” she says. .
increase savings
Croxon said it’s also important to find ways to save money as repayments continue.
“Incorporating a savings item into your budget, even if it’s just $20 or $25 a month, is an important step for almost every consumer,” he says.
“There’s going to be an emergency, and you’re going to need it.”
Being able to rely on savings in the future also helps avoid taking on debt again, he added.
know your rights
Wayne Hussey, partner solicitor at legal services provider LegalShield, says if an expensive item you bought in December or received as a gift breaks in January, it’s important to know your rights to a refund. It states that there is.
Whenever you make a big purchase, he suggests keeping track of all documentation associated with the item and any warranties that come with it.
In some cases, paying with a credit card can provide additional protection, he added.
If your expensive new electronic device breaks, don’t hesitate to contact the retailer or brand until you get a satisfactory answer that could result in a refund or a new product.
Ask for help if you need it
Working to pay off your debt and recoup your January budget can feel lonely because it’s a solo activity. That’s why it can be helpful to seek out additional support, such as a financial professional or a friend or family member.
“Be honest with people,” says Rapley.
She suggests that if you want to spend less and spend less, share it in your friends’ group chat. That way, you’ll likely have the encouragement to keep making plans.
“Communication is definitely important,” she says. This will help you feel less alone and help you look forward to better things in the coming year.
Updated: January 9, 2024, 6:15 a.m.
