All of our bills from Christmas are in and we were able to sit down and look at how our budget fared over Christmas. Our budget must have gone on holidays early because it obviously was nowhere to be during Christmas.
Is anyone else in this situation? We are generally pretty good with our budgeting. We use a cash based system which I have talked about here. Over Christmas though, the credit cards came out and the cash was forgotten about.
We spent an afternoon going through our bills and working out a plan to get ourselves back to living frugally.
1. Stop spending, put the credit cards away and go back to using your budget. This seems like an obvious step but I know I can get into a spending frenzy so this is an important step.
2. Sit down and work out how much damage you have done and where you spent the extra money. Finding out what you spent your money on can help you to identify when the situation will arise again. Surprisingly, our extra spending wasn’t on Christmas pressies, it was on all the holiday things we did and because we were at home - all the things we did around the house and garden.
3. If you can, use your emergency fund to pay off the credit cards and get the balance down to zero again. Doing this straight away would be ideal as it would avoid any interest charges on the credit cards. If you don’t have an emergency fund or you have just started one and it isn’t big enough to pay off the credit card, then put the money you would usually put into your emergency fund onto the credit card until it is paid off. You can then go back to building your emergency fund.
4. Go back to monitoring your spending by writing down everything you buy each day. This can help you get back on track. It can be hard to start again if you have really gone off budget so going back to basics can reinforce the good habits you were developing.Don’t beat yourself up about it. Wallowing in self pity and complaining about how bad you are because you have ‘failed’ is not going to help things and it certainly won’t encourage you to go back to frugal living. Firstly, you haven’t failed. If you have got to this step you have realised that you went off track and have taken steps to improve things and I think you should