You’ve unwrapped the presents and eaten the holiday dinner—a good time was had by . . . most. It’s time to sit back and enjoy. We want to make the after-effects of the holiday season even easier for you by offering advice for how to not only rebuild your finances after the holiday, but rebuild your finances from ground zero.
Here are 5 places to begin to repair and prepare your budget during the next year:
- Evaluate your income. Get creative and think about easy ways to make money by selling stuff you simply don’t want. Haven’t ridden your Vespa for 3 years? Dump it. Declutter your house like crazy. Once you get a system of selling going on eBay or Craigslist it’s one of the best ways to make a dent in what you spent for the holidays. Or try using skills that you consider a hobby to bring in some extra cash, like selling handcrafted or artistic items.
The New Year is a good time to consider your work situation too. Did you get a raise at the end of the year? Funnel that extra money to a savings account or use it to pay off the credit card debt you incurred from the holidays.
- Assess your spending. Look over your bank statements for the past few months. In hindsight, did you make purchases that you regret or purchases that you wouldn’t make again? Use this exercise to evaluate your spending and make deliberate purchases in the future. Take special note of any purchases you made associated with strong emotions. Try to avoid purchases when you are hungry, angry, lonely, or tired (HALT).
- Look at your tax refund. It’s nice to get that fat check when you receive a refund at tax time. But keep in mind that the money you’re overpaying in income tax could be working better for you somewhere else—especially if you’re rebuilding your finances. If you’re receiving a big check this year, put it aside or pay off that holiday debt that came through like a wrecking ball. For the coming year, consider talking with your tax professional to get a recommendation about your withholdings. You don’t want to be making interest-free loans to Uncle Sam.
- Negotiate some of your payments. Make a few phone calls to your cable provider and insurance company. Often you can bundle services or negotiate a lower rate just by inquiring. If you raise your auto insurance deductible it should lower your premiums. Consider cutting your cable bill entirely and replace it with subscriptions like Netflx or Hulu.
- Set up automated deposits into your savings. When you set up an automatic transfer from your paycheck to your savings or other wealth-building account, you’ll build a nest egg without even noticing it.
Be aware that this is a process that can take all year. But if you’re smart about it, the holidays won’t catch you off guard and gobble up the progress you’ve made. And finally, don’t get discouraged if you don’t see money pile up overnight. An attitude of gratitude for what you do have goes a long way in making you realize that you are already wealthy.
Overhaul Your Financial Strategy
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FAQ
Q: What are five quick ways to rebuild a busted budget?
A: Five quick ways to rebuild a budget include tracking expenses, creating a budgeting plan, reducing discretionary spending, exploring additional income sources, and prioritizing debt repayment.
Q: How does tracking expenses help with budget rebuilding?
A: Tracking expenses allows individuals to become aware of their spending habits and identify areas where adjustments can be made to align with budgeting goals.
Q: What role does creating a budgeting plan play in the process of rebuilding a budget?
A: Creating a budgeting plan provides a structured framework for effective financial management, helping individuals allocate funds and regain control over their budget.
Q: How can reducing discretionary spending aid in rebuilding a budget?
A: Reducing discretionary spending involves cutting back on non-essential expenses, freeing up resources that can be redirected towards essential needs and financial objectives.
Q: Why is prioritizing debt repayment important when rebuilding a budget?
A: Prioritizing debt repayment reduces interest costs and promotes financial stability, allowing individuals to allocate more resources towards their budgeting goals.
Reference: http://money.usnews.com/money/personal-finance/slideshows/25-ways-to-fix-your-finances-fast?page=23
