Dear SoFi, I overspent during the holidays and it has knocked me off track. How can I get myself back on course?
Overspending during the holidays is a problem just about everyone faces somewhere along the line. So let’s cover an important point first: don’t beat yourself up about it.
Between inflation, the convenience of options like buy-now-pay-later, and flashy Instagram ads, it’s a wonder any of us makes it out under budget. (On average, consumers planned to spend about $1,640 during the 2024 holidays, 7% more than in 2023, according to a PwC survey.)
But like many people kicking off the year with a post-holiday diet, you can make a plan to get out of debt and get your budget back on track, too. (Don’t worry, you can still eat cheesecake while on a financial diet.)
Here are some basic steps to get you on the right path:
1. First off, stop spending with credit cards. It’s a lot easier to dig yourself out of a hole if no one’s throwing dirt back in your way. If you can pay for your basic living expenses without your credit cards, put them away. Once you’ve paid your balances off and have enough saved to cover at least a full month’s worth of expenses, you can start using them again.
2. Review your expenses. Check your past credit card statements and your monthly budget for things you can live without. (If you don’t have a budget, don’t worry — it’s easy to make one or you can use a budgeting app, like SoFi’s Relay.) Look for stuff to cut out, especially if it’s been a hot minute since you reviewed your spending and you’re still paying for subscriptions or other things you no longer use. Takeout, Uber rides, going out with friends, and clothing would also fall into this “can live without” category.
3. Look for ways to make extra cash. If there’s not a lot of fat to trim from your budget, you may be able to turbo-charge your way out of debt by increasing your income. Temporary boosts like selling items you no longer use or doing a short-term side hustle can help.
4. Create a debt payoff plan. Use your budget to estimate how long it’ll take you to pay off your credit cards. If it’ll take you a few months, pay one off at a time, working on the card with the lowest balance first so you can feel good about your progress. (Of course, make at least your minimum payment on all your balances every month.) But if it will take nine to 12 months or more, you might want to think about consolidating your debt with a personal loan or margin loan.
5. Hit reset on your finances. History often repeats itself, as the old saying goes. So think about ways you can prevent overspending during the next holiday season. Can you set up a special holiday savings fund? Are there overspending triggers (like certain friends or those TikTok fashion hauls) you should avoid? Would a different budget style work better for you?
It can be challenging to keep your spending in check, and it’s easy to feel discouraged. Here’s one last tip that may actually be the most helpful: Try to reframe how you think about this setback. It’s not a failure, as much as it is an opportunity to learn how to adapt.
If you flawlessly followed your budget each month, you wouldn’t learn how to roll with the punches when you have financial setbacks. And that’s just as important a skill.
In financial health,
Brian Walsh
PhD, CERTIFIED FINANCIAL PLANNER®
SoFi Head of Advice & Planning
Image credit: Bernie Pesko/SoFi
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