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Some Tips On How To Recover From Your Overspending This Christmas.

Christmas to majority of us is celebration time, and for many people that involves overindulging on many of life’s finest things. From purchasing lavish gifts for friends and family to creating a feast that would last for weeks at any other time of the year, all of us spend too much. Now that the Christmas splendor has almost settled down, very many people are now looking at their bank statements and bills with wide eyes.  

Millions are now facing a financial struggle next month after overspending at Christmas. It will be painful to listen to the countless number of families explain the heartache and regret connected to what should be a joy-filled occasion. Almost one in three of people will feel pressured to fall into debt, or further into existing debt, as a result of spending too much.

The problems will be worsened by the fact that almost half of all workers were offered an advance payment early in December which means that they will have to adjust to a leaner January pay next year. The net result is that they will be feeling anxious, worried or even depressed throughout January and beyond.

However, recovering from Christmas splurges doesn’t require some complex algorithm. It is mostly a matter of knowing which steps to take to remedy the situation. So, let’s therefore focus on how to clean up the mess.

Assess your current financial state.
Total all the numbers that indicate everything you have financially (your resources) and all the money you owe (your debts). Record these figures so you can clearly take stock of your current financial situation. Eliminate all credit cards except for one card, unless you own a business and need a second card for business expenses. Use credit only when necessary, and use cash for all of your daily living expenses.

Focus on controlling your spending.
Virtually everyone wastes money in some way or another. Those candy bars and sodas can add up each month. To determine where your money is going, write down all of your expenditures for an entire month. At the end of the month add up your spending. Cut back on spending where you can and add those funds back into your budget.

Commit to avoid buying anything you absolutely don't need or haven't run out of, and if you slip and make a purchase that is not necessary, give something away to compensate for that item. Plan menus before going grocery shopping, research high-ticket items thoroughly before choosing the right products to buy, use coupons and negotiate with merchants when possible, and buy generic products instead of name-brand products when possible.

For one, start drawing up weekly meal plans. That way, you won’t be forced to eat out when you realise that there’s nothing left in the fridge.

Consider making Personal Sacrifices.
While you are trying to get on your feet again financially, it is important that you realise you are going to have to makes some personal sacrifices. This may mean you stop eating out completely, skip out on that concert you have had your eye on, etc. Consider carpooling or relying on public transportation to cut down on money spent to buy fuel. Downsize your home if you need to, save energy to cut back on your utility bill, and eliminate unnecessary costs, such as cable TV subscription for a few months.

It sucks, but as someone who knows, you are the only person to blame for your current situation, so you’re going to have to bear the consequences.

Prioritise your bills.
Some bills are essential, while other bills are considered nonessential. You must determine which bills fit into each of these three categories.

Essential bills are necessary for your survival and must be paid first. These include your rent payments (or mortgage), utility bills and food. Child support and any loans such as automobiles, furniture and so forth that are secured or used as collateral to obtain the loans should be included with the essential bills.

Nonessential bills are debts in which no immediate consequences would occur if payments are late. These include unsecured debts such as credit and charge cards, medical bills and newspaper subscriptions.

Prepare a proper annual budget.
One way of dismantling an impending financial crisis or beginning your recovery process is to create a budget that will give you a clear picture of your financial situation.

Begin by adding up all of your recurring bills. When calculating your expenses, keep in mind that some of your bills may be paid annually such as property taxes. Take the amount that is owed yearly, divide by 12 and add it to your budget. You should also include in your budget items that are unexpected such as car maintenance. Total all of your expenses. Next, total your monthly income. Now, subtract your expenses from your income.

If the amount is negative, it is imperative that you cut back your expenses in some areas. If the amount is positive, pat yourself on the back and put that extra amount in savings each month.

Stay out of the Stores and shop outlets.
One of the worst mistakes you will make at this time is to visit your favourite stores ‘just to have a look’. The truth is, you are not going to just look, you will definitely find something you want and probably end up spending money on them. So, when you are faced with a post-holiday debt situation, do yourself a favour and just avoid stores altogether.

Likewise, unsubscribe from all your online lists (the deals are too tempting) and, if you have to, get someone to set up a block on your browser to keep you from visiting your favourite online sites.

Employ the Cash Method.
Countless studies have shown that when a person shops with plastic they are more likely to spend more than a person who shops with cash. This is because when you swipe your card you don’t have to see your money literally going away like you do when you are shopping with cash. 

So, instead of carrying plastic around in your wallet this new year, carry cash instead (and only carry what you are budget allows you to spend for the week or month). Once the cash is gone, you know you have spent all you can while staying within your means.  

Communication is key in times of hardship.
If you are unable to pay all your creditors, communication is key. There can be severe consequences for not paying your essential bills. By communicating with your creditors you have a better chance of working out a repayment plan. Most of their creditors, including your landlord will be willing to work out a payment plan. Negotiate with your creditors about a figure that you can pay and make them an offer.

Train yourself how to save.
You can use the 50/50 super handy trick if at all you are the type that just spends but saves nothing. It is easy. Whenever you make a purchase that is a non-necessity, you put the same amount of what you spent on your purchase into your savings account. It is a great way to hold yourself accountable for your purchases and build a safety net for yourself along the way.

You can otherwise opt for the ‘Frog savings’ plan. Like the proverbial frog that does not realise to jump out of the pot when the water is heated slowly, you learn to painlessly save increasing amounts. This is meant to be an annual system, and it is really simple: you save say Ksh. 100 on week 1, Ksh. 200 on week 2, and so on, until the last week of the year you put away Ksh.5200.  Total saved over 52 weeks, Ksh. 137,800.

Of course nobody forces you increase all the way Ksh. 5200 a week. If after 20 weeks or even 10 weeks, you really feel the pinch, stop increasing but continue saving at that level. If you get up to Ksh. 2000 and continue at that rate. You will save Ksh. 85,000, and at Ksh.1000, you will have saved Ksh. 47,500 in a year.

Open a Holiday Savings Account Now.
One way to make sure you don’t end up end the same situation when the holiday seasons rolls around again is to start saving now by opening up a holiday savings account. When you create your budget, figure out how much you can afford to spare for savings and have it automatically transferred whenever you get paid. The balance will add up over the year and it’s a super easy way to not get sucked into the holiday-spending-hole yet again.

Form a support system.
Get together with some other friends who are currently going through financial struggles and share your knowledge and resources to support each other and meet needs like household repairs and rides to and from place. Be generous about helping your friends with what they need, and let them know what you need so they can help you.

Give to the Lord.
When going through a financial crisis it is easy to become discouraged and stop tithing. Second Corinthians 9:7-8 says: "Each man should give what he has decided in his heart to give, not reluctantly or under compulsion, for God loves a cheerful giver. And God is able to make all grace abound to you, so that in all things at all times, having all that you need, you will abound in every good work" (NIV).

If you for any reason you cannot give your full tithe, volunteer your time and services to your church or to a needy cause. Time is worth money. Later, when you are re-established financially, increase your giving. God will bless you when you give what you can with a cheerful heart.

God will always come through when we are obedient to Him. During a financial crisis, remember that things will get better.

And by the way, instead of focusing on what you don't have, focus on what you do have and express your gratitude to God regularly to keep the right perspective on your finances. Trust Him to continue to meet your needs - sometimes in unexpected ways - and look forward to the good future He has planned for you.

The Bottom Line
That financial hole you’ve dug yourself into isn’t as deep as it feels, but you should still make every effort to get out of it. That begins with reducing your credit card debt, adjusting your budget and trying to find additional sources of income. Once you’ve made some progress, start saving money for next summer so that you don’t find yourself in a similar situation a year from now.

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