Every November my husband and I sit down and map out a very careful Christmas budget. X dollars for this kid, so much for that one, our decorations, cards, booze. We’re about as anal-retentive as two people can get when it comes to planning.
And yet? Every year I’m shocked to open my VISA bill in January and find that we’ve spent a good deal more than we intended. Last year, we went over by nearly 50%(!). My only response was to transfer the extra cash from our savings account, pay the bill in full and weep bitter tears of shame that instead of growing like it should have, our savings account made a not-unnoticeable dip in January.
This year I’m back in the financial planning saddle again, both personally and professionally, and determined not to repeat last years’ mistakes. Of course, I’m not talking about the overspending. Nope. I won’t touch that with a ten-foot pole. That’s pretty much inevitable. You show me a Christmas budget – even one as perfectly planned as my own – and I’ll show you a hundred ways it can go awry. We ALL overspend.
What I’m talking about here is how to deal with the aftermath. By the time your VISA bill arrives, you’re long past the post-coital glow of Christmas morning. You’re just trying to make the wet spot as painless as possible. Here are some strategies that might help:
1. Divide and conquer!
Instead of just paying the bill, break it down. Figure out the error of your ways. Pull out your receipts and figure out EXACTLY where your spending went over budget. I don’t suggest this simply as a method of self-flagellation, but because knowing SPECIFICALLY how you overspent will give you an easy way of planning NEXT YEAR how to better forecast your spending and make more informed decisions.
2. Pay as much as you can.
This one rather goes without saying, but if you CAN pay off your entire VISA bill in January, you likely should. What you shouldn’t do is waste a lot of time castigating yourself if you can’t. One of my favorite financial planning strategies is the simplest: 50/50. Pay half now. Make a plan to pay the other half as soon as you possibly can.
3. Make a detailed gift list.
I royally suck at remembering numbers. It’s probably a professional hazard – I see a LOT of them, the cobblers daughter has no shoes, etc. And they become even more difficult to distinguish after 12 months. I can tell you EXACTLY the ratio of meats in my famous Christmas meatballs (33% lean beef, 33% veal, 33% pork, 1% MAGIC), but I can’t tell you what I gave my sister-in-law last year for Christmas unless I WRITE IT DOWN. So I do. Last year I gave her a $30 Target gift card, which was the exact same thing she gave me. By keeping a list of every gift given and received, again, you’ll have a better diagnostic tool at your disposal next year. Do this while you’re writing your thank you notes and you kill two birds with one stone.
4. Start saving NOW for next year.
Now that you’ve divided, conquered, detailed and wept, go ahead and start saving for the next holiday season. I mean it. Even if you haven’t finished paying for the holiday we’re just finishing, it’s never too soon to start saving for the next one!
Do you have any tips to share?
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