How to Recover from a Holiday Spending Binge
Dread opening credit card bills this month because you overspent during the holidays? You’re not alone: according to a Manulife Bank poll, more than half of Canadians expected to blow their budgets this Christmas, and 3 in 10 struggle to pay off debt after the holidays.
Sticking your head in the sand will only make the situation worse. Instead, use the following tips to pay off those incoming bills ASAP and avoid racking up additional charges in interest payments.
Bring in Extra Cash
The easiest way to deal with a holiday spending hangover is to quickly find additional funds that can go toward paying your bills in full. Here are a few suggestions for bringing in extra cash fast:
- Make gift returns and exchanges a priority. Retailers will usually only accept returns and exchanges for a limited time, so if you bought or received anything over the holidays you don’t like or think you won’t use, take these items back to the store as soon as possible. Also, keep track of any gift cards you received and make sure to use them: according to CardSwap, $1 billion worth of gift cards in Canada go unredeemed every year.
- File any outstanding tax returns. If you were expecting an income tax refund from a previous year but never filed your taxes, send it in now. Not only will you get your much-needed refund, but there may also be government paid benefits (such as the Canada Child Benefit or GST Credit) you could be entitled to.
- Submit or follow-up on any outstanding insurance claims. Yes, these can be time-consuming tasks involving a headache of paperwork, but don’t leave money on the table. Make sure you get all the funds you’re owed for any outstanding health, auto or home insurance claims.
- Negotiate a better deal on your internet, mobile or home phone service. You may have to threaten to leave for a competitor, but lower rates are often available to loyal customers who are smart enough to ask. The worst the provider can do say is no, so why not ask?
- Find a side hustle or make money fast online. Even if it’s just for a month or two, the extra income from taking on a part-time gig, filling out internet surveys, renting out a room through Airbnb, or selling old stuff online can make the difference between paying off your bills or carrying interest charges through the year.
Transfer Debt to a 0% Interest Card
Another way to buy yourself time to pay off your bills? Before interest charges start to rack up, get a 0% balance transfer credit card like the MBNA True Line® Mastercard® credit card, which offers 0% interest on balance transfers for 12 months.
– Credit score required: Fair-Good
– Min personal income required: N/A
– Annual fees: $0
– Balance transfer fee: 3%
– Cash advance rate: 24.99%
– This offer is not available for residents of Quebec. For residents of Quebec, please click here
Tip: you don’t have to transfer your full credit card balance. Instead, transfer whatever portion of debt you’ll be able to pay off during the introductory 0% rate window. This savvy strategy will help prevent suddenly being hit with high interest rate charges 6 to 12 months down the road.
This offer is not available for residents of Quebec. For residents of Quebec, please click here.
Dial Back Your Spending
If you overdid it during the holidays, it’s time to tighten your belt — at least temporarily. Once you pay off your bills you can resume your usual spending habits if you like. Try one or two of these money-saving ideas to get you started:
- Skip the gym membership. It’s admirable to have a New Year’s resolution to get fit, but it’s a bad idea to take on additional expenses when you’re already in debt. If you’re really committed to improving your fitness, start by adding extra time into your day to walk, jog, climb stairs or do home-based workouts. Once this becomes a habit and you’ve successfully carved out the time in your schedule for exercise (and you’ve paid off those holiday bills) you can go ahead and reconsider the gym option.
- Brown bag your lunch. Packing simple soup/sandwich/salad lunches will not only get you back into healthier eating after the excesses of the holidays, where you can save significantly.
- Use a thermostat with a timer. Canadian winters mean paying more in hydro or gas for home heating, but there’s no sense in paying to heat an empty home. Use a timer to lower your thermostat in the morning when you leave for work and go back up again when you get home in the evenings.
- Get or renew your library card. Most of Canada’s public libraries loan out far more than books. The stacks are filled with movies, magazines, music, video games — enough to keep you entertained for a month or two without spending a penny. Many public library systems also have excellent websites that allow you to request items and have them sent to your local branch, or borrow/stream digital media. Some even offer free family passes to museums, art galleries and other attractions.
- Take a break from social media. Research shows that social media can make people spend more money out of FOMO (fear of missing out), or just trying to keep up with the Joneses. Reduce the urge to splurge by staying offline for a while.
- Check out these additional money-saving ideas to get back in the black.
Create a Plan for Next Year
Finally, if you typically overspend during the holidays, take steps now to avoid going further into debt next December. Open a high-interest savings account specifically set up to fund your holiday spending next year. Then set up automated monthly transfers so you’ll have enough cash on hand to get you through the festive season — without the burden of debt in the New Year.