How are you feeling about your spending habits right now? Did you go a little overboard during the holiday season? Are you dreading your monthly credit card statement? Did you receive more things than you expected (and some things you do not want)? You made some decisions and there are some inevitable consequences. Yet, as you approach the beginning of a new year, let’s take a deep breath and fearlessly consider solutions that may help you to feel better.
Overspending. One consequence of overspending may be that your credit card bill may be larger than usual. Solutions include paying the bill in full, paying more than the minimum, or reaching out to the card issuer to make payment arrangements. If you normally pay your credit card balances in full, it may be challenging to make that payment. To resolve this situation, you may need to reduce discretionary expenses in your household budget. Some people may not be able to pay their credit cards in full every month. If you normally pay the minimum due, that amount may be higher than usual, and you may pay more in interest charges over time. To resolve this situation, you may need to pay more than the minimum to reduce those interest charges. Finally, if your credit card bill feels insurmountable, reach out to the issuer of your credit card to inquire about payment options. The critical takeaway here is to make your credit card payment on time to maintain or build a positive credit history and communicate with your credit card issuer if accommodation is needed. (There is no guarantee that the issuer may make an accommodation, but it is worth the ask.)
Receiving stuff. One consequence of receiving gifts may be that you have more stuff in your home than you would like, including some things you are stoked to own and some things you have no intention of ever using. One solution is to donate to a thrift store or nonprofit organization that accepts donated goods. For those things you are stoked to own, consider replacing like-for-like. Consider an item of clothing like jeans. If you received a pair of new jeans, choose to donate a pair of jeans you no longer need. For those things you have no intention of using, consider donating those as well. The critical takeaway here is to ensure you cultivate an environment of what you enjoy and appreciate rather than one where you feel obligated to own things that do not suit you.
Buyer’s remorse. One consequence of buying many things at once is that there may be some things you wish you hadn’t bought. Some solutions include making a return, selling on Facebook marketplace, or hosting a swap party. First, check the return policy of the merchant to confirm that you meet the requirements and then make the return. If you do not meet the requirements, consider selling the item on Facebook marketplace. Finally, consider hosting a post-holiday swap party where guests bring holiday gifts they’d like to exchange so you can eliminate the stuff you have no intention of using and the stuff you wish you’d never bought. Who knows? You may reduce the clutter and meet new friends.
Your personal financial situation is impacted by a variety of factors, from your life circumstances to your attitudes about and behaviors associated with money. In addition, what some people may find relevant to their personal financial situation may be completely irrelevant to others. Truly, there is no universal method for approaching personal finance so give yourself space for grace and be open to creative solutions.
Wendolyn Forbes is a CERTIFIED FINANCIAL PLANNER™ with Wealth Transition Finance, A Member of Advisory Services Network, LLC. Wendolyn is a fee-only financial planner and member of the National Association of Personal Financial Advisors (NAPFA). For more information, please visit her website at www.wtf-asn.com.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP® (with flame design) in the US, which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
This material is provided as a courtesy and for educational purposes only. Advisory Services Network, LLC does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. Federal and state laws are complex and constantly changing. Consult your own legal or tax professional for information concerning your individual situation.