The holidays are over, and the decorations are back in storage. If overspending at the checkout counter left your bank account feeling more "hu, hu, hu" than "ho, ho, ho," you’re not by yourself.
The numbers don’t lie.
A 2023 LendingTree survey found that nearly 36% of Americans took on holiday debt, averaging $1,549 per person. And what about last Christmas? With inflation on the rise, that figure is likely climbing higher.
So why are we talking about this? While the answer may seem obvious, the solution to overcoming holiday overspending is not. For many, the New Year begins with a financial hangover, leaving us scrambling to regain control of our finances.
The good news? It’s never too late to hit "reset" on your budget and take control of your finances. By following these actionable steps, you can tackle post-holiday debt, build a realistic budget, and set yourself up for a more secure financial future. Whether it’s prioritizing debt repayment, cutting unnecessary expenses, or setting new savings goals, small changes can make a big impact on your financial health.
Start the year strong and take charge of your spending habits today!
How Holiday Spending Impacts Financial Health
To better understand consumer behavior, we conducted a survey asking 10 random individuals if they had set a budget for their holiday spending. Surprisingly, only 2 out of 10 had planned their expenses in advance.
Notably, those who did establish budgets reported feeling less financial stress and greater control over their money.
The Reason Behind: For many Americans, however, Christmas is seen as a season of giving, where the joy of rewarding loved ones often outweighs concerns about the debt left behind.
This insight highlights the importance of financial planning during high-spending periods like the holidays.
Holiday overspending may feel harmless when you're caught up in the joy of gift wrapping and seasonal festivities. But the financial impact can extend far beyond the holiday. You don’t wanna end up being sued by debt collectors in the long run.
Understanding the consequences of overspending during the holidays is key to avoiding financial stress and building healthier money habits.
The Hidden Costs of Holiday Overspending
Rising Credit Card Debt.
Overspending often leads to ballooning credit card bills that can disrupt your monthly budget for months. High-interest rates make it even harder to pay off balances, turning holiday purchases into long-term financial burdens.
Drained Emergency Savings.
Dipping into your emergency fund to cover holiday expenses can leave you unprepared for unexpected costs. These are emergencies like car repairs or medical bills, early in the new year. This lack of financial cushion can add unnecessary stress.
Post-Holiday Spending Regret.
Many people experience regret once the excitement of the season fades. Starting the new year with financial strain can feel like taking a step backward instead of forward.
By understanding the true cost of holiday spending, you can motivate yourself to change your financial habits. It's not just about what you spent in December—it's about how those decisions will affect your finances for the next six months (or longer).
New Year Financial Reset: Recovering From Holiday Debt
If you’re among the 8 out of 10 people who didn’t plan their holiday spending, keep reading. Since you can also be starting the new year with holiday debt, now is the time to take control.
With a few simple strategies, like setting a budget, prioritizing thoughtful gifts over pricey ones, and planning ahead, you can set yourself up for a stronger financial future.
Step 1: Assess the Damage (Financial Audit 101)
Did you splurge on gifts? Overspend on decorations? Indulge in too many holiday treats. Before tackling your finances, you need a clear picture of where you currently stand.
Start with a post-holiday financial audit and here’s how:
- Calculate total holiday expenses by reviewing receipts, credit card statements, and online transactions.
- Track overdue payments and high-interest debts to see what needs immediate attention.
- Review your savings (including your emergency fund) to identify any withdrawals made during the holidays.
- Take stock of your current budget to see where you may need to cut back to make up for holiday spending.
Once you understand the full extent of the damage, you can craft an effective solution.
Step 2: Set a Budget (and Stick to It!)
Once you have an idea of your post-holiday financial situation, it's time to set a budget. Out with the old, in with the intentional. A budget is not a ball and chain, it’s a tool to help you make informed spending decisions.
Here’s how to craft one that works for you in the long run.
- Start with your income. Calculate all sources of income to determine how much you have to work with.
- List your fixed costs. Include rent, subscriptions, utilities, and transport—all the non-negotiables.
- Account for variable expenses. Estimate how much you spend on groceries, dining out, and other discretionary items.
- Allocate debt repayments. Add a line for any holiday credit card debt or overdrafts.
- Prioritize necessary expenses: These include rent/mortgage, utilities, groceries, and debt payments. Make sure these are covered before allocating money towards discretionary spending.
- Limit unnecessary expenses: This includes eating out, entertainment, and impulse
Use a budgeting tool or app for seamless tracking. Popular options like Mint or YNAB make organizing your finances much easier. This will help you get back on track and avoid overspending in the future.
Pro Tip: Keep the numbers front and center—the reality check will empower you to start making meaningful changes.
Step 3: Set New Financial Resolutions
Every great recovery plan starts with a clear goal. Use the new year to rethink your financial priorities and establish realistic, measurable resolutions.
- Focus on SMART goals (Specific, Measurable, Achievable, Relevant, and Time-Bound). For example, "Eliminate $1,500 of holiday debt within 4 months."
- Prioritize needs over wants. Plan out necessities like rent, groceries, and utilities before budgeting for non-essentials.
- Add a savings target. Even if it’s small, commit to rebuilding your emergency fund or adding to your existing savings.
Write your goals down, and don’t forget to celebrate each milestone you achieve!
Step 4: Adopt Smart Saving Strategies
When it comes to saving money after Christmas, every little change makes a big difference.
How to Save Money After Christmas
Here are some tried-and-true methods to conserve cash where it counts.
- Try a spending freeze. Commit to not spending on anything non-essential for 2-4 weeks.
- Shop smarter. Use coupons, cashback apps, and comparison websites for groceries and purchases.
- Downshift branded items. Opt for store-label versions of products to trim grocery bills.
- Cancel unused subscriptions. Audit your streaming services and memberships to cut unnecessary costs.
The key here is consistency. These small steps become impactful habits when maintained over time.
Step 5: Implement Your New Plan
A budget means nothing without action. To truly improve your financial health, you’ll need a clear strategy for sticking to your plan and building positive habits over time.
Here are some practical steps to help you succeed:
Use Automated Transfers.
Take the guesswork out of saving or paying off debt by automating the process.
- Set up recurring transfers to your savings account on payday. This ensures you save before you have the chance to spend.
- Automate minimum payments (or more) on credit cards or loans to stay ahead and avoid late fees.
- Consider dividing your paycheck into multiple accounts—one for savings, one for bills, and one for discretionary spending—so you always know what you're working with.
Automation removes the temptation to skip payments and helps you build momentum without constant effort.
Review Progress Weekly.
Consistency is key when it comes to sticking to a budget. Schedule time to check in with yourself, just like you would for a workout or important meeting.
- Spend 15–20 minutes every Sunday reviewing your spending for the week. Did you stay within your limits? Are there categories where you overspent?
- Adjust your plan as needed. Noticed unexpected expenses? Find areas where you can compensate in the coming week.
- Use budgeting apps or spreadsheets to track your progress visually; seeing your achievements can be motivating.
Find an Accountability Buddy.
Managing your finances alone can be tough, but sharing your goals with someone you trust can keep you on track.
- Choose someone reliable who knows your plans and can offer encouragement or a nudge when needed.
- Schedule regular check-ins to discuss your progress, challenges, and wins. These conversations can help you stay motivated and refine your approach.
- Consider joining an online financial community or group for more support and tips from others on the same journey.
Celebrate Small Wins.
Staying motivated long-term means celebrating progress, even if it feels minor.
- Paid off a credit card? Treat yourself to something small and meaningful within your budget.
- Hit your monthly savings goal? Take a moment to acknowledge that success—progress like this deserves recognition.
- Break long-term goals into smaller milestones to track and celebrate along the way.
Stay Flexible but Persistent
Life happens, and unexpected expenses can derail even the best plans. The key is to adapt rather than give up.
- Build an emergency fund to handle surprises without derailing your budget.
- Focus on persistence over perfection. If one week doesn’t go as planned, pick up where you left off without guilt.
- Remember that building financial health is a long-term process. Some months will be better than others, but every step forward counts.
By automating your finances, staying consistent, involving others for support, and celebrating wins, you’ll create a system that makes sticking to your budget easier and more rewarding.
Learn from Your Mistakes
Overspending during the holidays can feel like a one-time blunder, but without reflection, it’s easy to repeat the same patterns next year. Before making future financial decisions—especially when it comes to loans or credit—it’s important to pause and ask yourself the right questions.
Not sure where to start? This guide from ASAP Credit Repair USA breaks down 12 essential questions to answer before borrowing. Think of it as your cheat sheet for avoiding financial regrets later.
Smart decisions now mean fewer "uh-oh" moments later. Learn from your past and set yourself up for a brighter financial future!
Build Financial Resilience and Take Charge
Holiday overspending doesn’t have to derail your finances. With a clear plan, smart strategies, and consistent effort, you can take back control and rebuild your confidence.
It’s also important to keep an eye on your credit score. Overspending during the holidays doesn’t have to damage your credit. At ASAP Credit Repair USA, we’re here to help you understand how to maintain a strong credit score and guide you in protecting it.
Start with small, steady steps and stick with them—you’ll be surprised how quickly you can make progress. Post-holiday financial recovery is just the beginning of a stronger, more intentional financial future.