How to recover from the Christmas overspend

By Dr Pushpa Wood

Now that Christmas is a distant memory, the credit card statements and other bills are starting to make their way into your inbox or letter box and reality is starting to hit. You may not want to admit it, but you may have been caught up in the fever of Boxing Day and other sales and, before you know it, you’ve spent more than you intended to. Sound familiar? You are not alone. It happens to most of us at some time in our lives.

The question is, what do you do now?

On one hand you still want to enjoy life and prefer not to tighten the belt (or wallet if you prefer), but at the same time you also want to be able sleep peacefully and not worry about your bills!

So, if you do find yourself in this predicament, I suggest you remind yourself of an old saying: “Keep calm and carry on.” Take it from me, it does work. So let us put it into practice.

Keep calm – getting unnecessarily stressed or shouting at others, blaming others for your financial woes is not going to achieve anything. They will still be there in the morning, waiting for you!

Step one

• List everything that needs to be paid.
• Organise the list in order of priority – separate bills incurring interest and bills that have an interest-free period.
• Place the highest interest-bearing bills at the top, and so on.
• Revisit your budget and identify the amount you can put towards paying off your bills. The general rule is, the sooner you can pay off the interest-bearing bills, the more money you will save yourself.

Step two

• Create a schedule of payments. Apart from other details about the bill, this also needs to include the amount you will be paying off each week/fortnight/month.
• Work out your final date of payment for each bill.
• Build in a small reward for yourself if you manage to pay it off ahead of the scheduled date. Cutting one coffee or on takeaway meal per week and putting that money towards paying off your bills will help to reduce your debts faster. 

Step three

• Remember to keep the rest of your spending under check, especially if you are in the habit of using your credit card without pre-planning. You may need to modify your spending habits while you are paying off your Christmas overspend.
• If you have borrowed money from different sources over Christmas and all of these bills are starting to haunt you all at once, the best strategy is to sit down, take few deep breaths, list everything and maybe talk to your bank to see if you can consolidate all of your bills in one place. This will hopefully be at a much lower interest rate than what you are paying currently, taking away some of the stress. 

Step four

Set up your Christmas 2019 savings account. Start putting some money into that account regularly. It doesn’t have to be a large amount – even $2 or $5 a week at the start will help. Once you have paid off your 2018 Christmas bills, you can start focussing on saving for Christmas 2019.

Dr Pushpa Wood is the director of the Westpac Massey Fin-Ed Centre (Financial Education and Research Centre).