Bouncing back from debt after the holidays
Buying items on your wish list
It’s easier than you think
But trying to fill the luxury gap
Has pushed me to the brink
– Heaven 17, Key To The World
The Christmas season is over and the new year is upon us. With it comes the harsh, cold reality that ‘we went to town’ to ensure that family members got gifts and treated to scrumptious meals.
Added to that is the fact that for some, payday came earlier in December, making the distance to the next payday even longer.
Some parents made the difficult decision of taking loans to meet the additional expenses. Now in addition to the ever-present bills is the added stress of servicing the loans.
It will now take some creative financial balancing act and skilful manoeuvring on the home front to recover in the new year.
Winsome Sherrier Witter, certified coach, inspirational speaker and founder of Serenity Advisory Consulting Services said, while it would have been good to be more prudent in spending, it’s a great opportunity for the family to work together to prepare a budget and stick with it to make it to the next payday and beyond.
Witter said in the same way a conscious decision was made to spend extra and take on a loan, a deliberate decision must now be made to cut back on the spending.
“Prepare a budget for everything that will be spent going forward. When shopping, go through the cupboards or do a checklist of what’s really needed,” she said, emphasising that a distinction must be made between need and want.
This way, she said, the budget will focus on the essentials and not on what sent the family’s budget out of whack in the first place.
Instead of giving the children money to purchase lunch at school, as a means of cutting back and allowing the dollar to stretch to the next payday, Witter suggested that parents make sandwiches or other home-made meals for children to take to school. Parents may also need to take lunch to work, as an added cost-cutting measure.
“Making it through the month will have to be a family decision, don’t be afraid to let your child/children know the situation. Let this be a time for the family to learn and grow together, as you explore creative ways of surviving the cost-cutting and juggling until you have overcome that bump in the road,” said Witter.
For those who took out loans for the holiday season, Witter said the damage is already done, so now it is time to sit and write a realistic plan. The loan will have to be serviced and food will still have to go on the table from the same paycheque.
She said this will take a medium to long-term plan to deal with, and as such, parents will have to look at what they can cut back on and plan simpler more affordable meals, even if children gripe about it!
For those with credit cards, Witter said the temptation may be great to use it to fill the gap, but she warned that it would only be exchanging one headache for another.
While it is easier to pay the ‘minimum’ rate, she said the interest on the debt is higher. The ideal thing to do is to set your budget, stick with it and wade your way through the months ahead.
Witter said, “The entire family can learn from this experience. Realise that it took some skilful juggling to balance your budget and make it work. So going forward, make budgeting a monthly activity and be sure to celebrate your efforts, at intervals, with a little treat. With consistent efforts, come Christmas 2020, this new financial discipline will allow you to make better judgements in dealing with the holidays and your spending habits, in general.”