Many folks find themselves overspending during the holiday season and then they feel overwhelmed at their financial situation in the New Year. It is easy to get carried away when you keep on finding another great gift for your kids or for your spouse, but you need to know when to stop.
Since the past is now behind us, if you are in a position right now where you have overspent, do not panic. Instead, create a practical plan and put it into action ASAP in order to pay off that holiday debt.
Before making any unnecessary purchases or increasing your investment contributions, make sure to allocate every spare penny towards your highest interest debt first. Then, tackle any lower interest debt that you have once your credit cards, etc. have been paid off.
After you have taken care of your holiday debt, then go over your finances and determine how much you can afford to save every paycheck to go towards your various savings goals.
Be sure to allocate some of your savings towards an emergency fund. Next, consider how much you should allocate towards your retirement savings. If you have children, decide how much you can afford to allocate towards RESP contributions. Finally, if you have other specific savings goals such as saving for a home down payment, be sure to set up an account and allocate funds towards those goals as well.
If you already have automatic contributions set up to go into RRSPs, RESPs, TFSAs, etc. then revisit them and try to increase them if possible. Many employees receive an increase in pay beginning in January, so if you are one of those who has benefited from this, bump up your savings accordingly and you will reach your savings goals faster.
As well, in order to prepare for another Christmas season in 2011, set up a Christmas savings account and tuck a little away every month or every pay day so that next Christmas you won’t be having to tackle any holiday debt issues
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