People eagerly wait for the festive season every year. That is also the time when lucrative discounts and offers are available everywhere. Often people tend to overspend during that time. However, once the festive season is over, they realise they have exceeded their credit limit and now have to clear a hefty bill. The question is – can you manage the finance once you have overspent?
Let’s find out how you can manage your finances when you have overspent during the festive season.
Assess your current financial situation
Estimate your existing financial status and how much you have overspent. You can note how much money you have spent during the festive shopping and the increase in your debt due to overspending. It will give you an idea about the increased financial liability due to the festive splurge. Add the new debt to your existing repayment obligations. You must verify the spending with the actual bills and match the same with your credit card/ bank statement. Take an assessment of your financial situation and focus on meeting your regular financial expenses and lowering the impact of overspending.
Also Read: No-Cost EMI Scheme: Should you opt for it? Here’s what you must know
List your financial priorities
Overspending can detract you from your financial goals. So, you must review and set your financial priorities right after the festive season. Keep the essential items at the top of your priority list. Keep investments related to your financial goals for the short and long term at the top of your priority list. Keep debt repayment also at the top of the list. Keep expenses on vacation, shopping for non-essential items, dining out, etc., lower down on the list.
Reset your budget and stick to it
You may have been following a budget before the festive season. The same budget, however, may not work for you anymore. You need to reset your budget in sync with your existing financial position. Focus on reducing your expenses by removing the items which are at the lower end of your priority list. Depending on your income, draw up a plan to meet all your expenses which are kept higher in your priority list. If you cannot meet the essential costs, you must focus on arranging funds for the same. If your existing income is sufficient to meet all the expenses, then use the funds left in hand after completing all the costs to save for the future. You should aim for a quick financial recovery and return to your regular financial practices.
Pay EMIs on time
If your debt has increased due to festive overspending, you should focus on repaying them on time. Often the festive debts are offered for a short term, and they carry hefty interest charges. Evaluate the option of closing the high-interest festive debt through a long-term low-interest loan such as a loan against securities, a loan against gold, etc. However, you should be careful while foreclosing the festive loans because they may cost you prepayment/ foreclosure charges. Servicing your debt on time can help you avoid repayment default and manage your credit score at a higher level.
Adhil Shetty, CEO, Bankbazaar.com, says, “Festive season is a time to celebrate with our family and friends. Often, we wait for festive time to buy things that have been on our list for months as this is the time when there are big discounts available on consumer goods. However, you must remember that whatever you borrow, you must pay that back on time. Spending what you can repay without any financial hardship is a good practice. Occasionally you might overspend, but you cannot afford to do that frequently. Pay your debts on time to avoid damaging your credit score and financial stability.”
Also Read: Lending Scams: Smart tips to avoid illegal digital lenders
Focus on achieving your financial goals
After the festive season, you must concentrate on achieving your financial goals. You can’t put your financial goals at risk because of overspending. So, make essential financial adjustments to focus on saving more. Overspending regularly is risky for your financial stability. That is why you must spend as per your budget and without compromising on your savings.
Paying The Bills
* Note down how much money you have spent on festive shopping to know the exact amount of your increased liabilities
* Pay your debts on time to avoid damaging your credit score and ensure financial recovery
* Close the high-interest festive debt by arranging funds through a long-term low-interest loan