In just a couple of more days we will once again take part in the annual ritual of saying goodbye to the current year and ringing in a new year with various festivities. Some of us will go out and party like rock stars while others will look forward to having a relaxing evening with the kids and being in bed by 11pm. As someone who just turned 30 and has a two year old and a pregnant wife, mine will be the latter.
With every new year comes the resolutions that fizzle by the middle of January and the credit card statements that arrive in the mail reminding you how much you actually spent during the holidays. If this year is no different than last, then you’ll probably start praying for that big tax refund to pay off all your debts. But as I explained in my post about big refunds, you might as well be flushing that money down the toilet. Here are five simple ways to recover from your holiday hangover and start 2011 off on the right foot.
1. Pick up extra hours at work
Depending on the type of job, you might be able to work some extra hours and even earn overtime pay. Working does two things to ensure an easy transition to the new year. First, it allows you to earn some extra money to put straight towards your credit cards or into savings, and second, it prevents you from spending even more money because you’re busy working.
2. Use savings to pay off debt
Savings accounts these days earn an average of less than 1% while credit cards can charge up to 30%! If you can’t pay off your cards in full using your weekly salary, what’s the point of having anything in savings? Use the money in your savings account to avoid unnecessary finance charges and build your savings back using weekly income.
3. Transfer balances to existing card offering 0%
If paying off your debt in full is not possible then think hopefully you qualify for a balance transfer offering little to zero interest. I receive offers almost daily for 0% for 12-15 months with the small fee of 4%. Depending on how much debt you have and the interest rate being charged, 4% may only equal two or three months of interest. That would still leave you with nine months of interest free time to pay off the card. Just be careful not to miss a payment or max out your card as these conditions can lead to rates being jacked up over 30%.
4. Remove all but one credit card from your wallet/purse
Most people carry 3 – 5 credit cards with them in their wallets giving them the ability to buy whatever they want whenever they want. At the beginning of 2011, when so many of us will feel the money pinch, it will be all too easy to just reach into our wallets and purses and pull out any credit card to use. If you only carry one card you will be less likely to use it.
5. Create a monthly budget
This is a no-brainer yet most people refuse to make one. For one reason or another people decide they “know” where their money goes and how much they need and then fall into the credit card trap. Budgets need to be created to keep us on track and prevent us from overspending. They are incredibly easy to make and can help save us a fortune in interest fees. If you need help making a budget send me an email at daniel.bresnick@gmail.com.
New Years is a time for celebration and shouldn’t be cause for stress over money. If you plan carefully you can ring in the new year worry free and start 2011 off right.
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