The first few days after Christmas can be a very stressful time for people who have overspent and created a financial mess for themselves. If you’re one of those people, you may be realising that your Christmas debt will be hanging over your head for the next few weeks or even the next few months.

Even though you are not in the best financial position heading into the New Year, there are a few things that you can do to start cleaning up your finances right now.

Figure out what happened/what didn’t work

Analysing your finances after the holiday season is an important exercise to do to take care of your finances. Figure out how you ended up in the current position that you’re in.

Did you create a Christmas budget? If you did, did you stick to it? If you stuck to your budget and still found yourself in a financial mess, then maybe your budget was unrealistic. This is an important point to note because in the future, you should create budgets that realistically reflect how much you can afford to spend without relying on credit cards. If you did not stick to your budget, ask yourself these questions to figure out why:

1. Did I make a shopping list?
2. Did I stick to my shopping list?
3. Did I buy presents that were out of my price range? If so, why?
4. Did I shop around for the best prices before I spent my money?
5. Should I have begun shopping for presents earlier?
6. Did I rely too much on credit cards and loans to subsidise my spending?
7. Where could I have cut back on spending?

Make a mental and physical note of your findings to remind yourself of this year’s shortcomings and to help you avoid falling into the same predicament next Christmas.

Cut back on spending now

You probably do not have any cash available for any additional spending, especially if you won’t be receiving your next paycheck until the 15^th January. Nevertheless, you can easily fall into the trap of relying on credits cards, your work bonus or an emergency fund to buy more things. At all costs, purge yourself of spending. Only spend money on the things that you need, not the things that you want. Avoid the after holiday sales that will cause you to fall into additional debt.

Make a plan for cleaning up credit card debt quickly

If you used credit cards to buy Christmas gifts, make a plan for paying them off as soon as possible. That plan should include a deadline for paying off those credit cards and a monthly payment that is more than the minimum amount required. Any additional income that you get from a work bonus or another job can be put towards paying off that debt quickly. You may also wish to pay off your credit cards that have the highest interest rates first to avoid paying additional money towards interest.

Once you have set your goal to clear up your credit cards, determine how much you will pay each month, set up automatic payments to ensure that the money goes where it needs to go.

Start preparing for next Christmas

It may seem premature to do so, but we guarantee that it beats the headache of last minute shopping. Make a realistic budget and a list of any big ticket items that you plan to buy and start putting money aside towards those gifts. Take advantage of the biggest sale days of the year to buy those gifts at a discounted price (only after you have saved up enough hard cash for these gifts of course).

If you start preparing now, learning from the lessons of this year, you can find yourself debt-free period this time next year!