The third Monday of January is officially the most depressing day of the year. In fact it's often referred to as "Blue Monday." For good reason, too. The excitement of the holidays is long gone, the next statutory day off work is more than a month away, and the dreaded holiday credit card bills have started arriving. Debt can be one of the major reasons you feel so blue.
My friends, it’s time to atone to all spending sins during the busy Christmas season. You know what I’m talking about: the last minute gifts, the many dinners out with friends, and the beautiful decorations for your home. For some, it was expensive travel out of town to visit family during the holidays. All those expenditures are now catching up and can result in what I like to call the Money Hangover. I have the right tonic to cure your pain and the remedy to keep you on track for next year.
Write down everything you owe right now; don’t just look at one credit card bill - look at all of them. Also, how much money did you borrow from your line of credit? Maybe you took a loan from a family member? Even if you borrowed from you own emergency savings account to fund your Christmas shopping spree, write that number down. Then add in the debt you were already carrying. What is that big fat number? That is the total consumer debt you owe right now.
This is a three month plan to pay debt off, but some of you will be able to do this much sooner, and some will need more time. The message here is to make a plan to get out of debt as soon as possible. Calculate how much income you will be bringing in for the next 90 days. Then calculate all you fixed costs: rent or mortgage, utilities, food, transportation, insurance, etc. These are bills you have to pay no matter what. Your income minus your fixed costs helps you see how much extra money you have for debt repayment.
Start with the highest interest debt first. Make minimum payment everywhere else while paying the maximum to your most expensive loan. Once that loan is done, stay on that same plan until the debt is paid down. You already should know if you have enough to pay your debt down in three months; if you don’t, you may consider finding an extra source of income or selling some items in your home to get that debt paid off. If you are overwhelmed with the amount of high-interest debt you have, think of talking to a credit counselor to consolidate your debt. As well, call the credit companies you owe money to and negotiate a lower interest rate.
We get a lot for gifts at Christmas we have no intention in using. That is wasted value. Return what you can for cash and gift cards. Sell anything else in the online classified. Whatever cash you get, use it pay your debt. A little trick: save your gift cards for next Christmas and you can use them to ease your shopping costs at the end of the year.
It’s amazing that this even has to be mentioned. But don’t go shopping until the debt is paid off. Until your consumer debt is under control, you have no right to hit the mall. Only buy what you need: food, essential clothing, etc. This is not the time to splurge on a new spring wardrobe.
We all remember what it was like to make things happen on a small amount of money when we were students. Go back to that thinking. Find free entertainment, stay in and cook, enjoy some quiet time after the hectic holidays. Leave the car at home and bike where you can - or take the bus.
Print two copies of your highest bill. Frame one and put it in your office or bedroom - somewhere you can see it all the time as a year-long reminder. Pack the other copy with your Christmas decorations. Then when you start getting ready to decorate your house for Christmas 2016, you will be reminded of the financial damage you did last year. This visual reminder will help you avoid a Money Hangover in January 2017.
Chin up on this the most depressing day of the year, and good luck with your Money Hangover.
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