With the 4th of July weekend just behind us, you may have spent time splurging a little on some shopping. A spending spree can dent your wallet and to an existing pile of consumer debt. As much joy as a spending spree can bring you in the moment, if you fail to take steps to recover from it, you may end up paying off more debt than you bargained for.
5 Tips to Recover From a Spending Spree
- It’s now time to stop shopping. The post 4th of July clearances can be tempting, but this is a crucial first step to take to recover from your spending spree. Shopping can be an addictive activity. Therefore, avoid shopping as a hobby or just to pass the time. If the urge does strike, try thinking wants vs. needs. Do you need those shoes? Or do you need to pay your rent this month? Do you need the $150 jeans? Or can you find a less expensive pair that will do?
- Try the 10-second rule. If you’re considering a purchase, give yourself 10 seconds to decide. If it’s an absolute necessity, then it’s an easy choice. If it takes more than 10 seconds to decide, then it’s a “no.” This rule can be applied to any of your everyday purchases to ensure you don’t end up paying off debt that is unnecessary.
- Shop for a bargain. If you do identify a need at a time you are trying to recover from a spending spree, keep a look out for sales, coupons, and used items to cut down the cost of fulfilling that need.
- Make some returns. After a shopping spree, when you’ve had time to think about your purchases, make some returns. You’ll probably realize that you spent too much, so go ahead and bring some things back.
- Put your spending money towards your debt. If you’ve been using a credit card for your shopping spree, then you’re bound to have racked up some debt. Skip the shopping, and put more money towards your credit card debt. Try the snowball method to see quick results, or the avalanche method to repay the debt faster. See this Infographic for more information on these methods.
- Create a budget. Now that you’ve stopped shopping and started repaying your debts, it’s time to create a budget so it doesn’t happen again. Calculate your monthly income and regular expenses. If you have money left over, start saving some in an emergency fund. Ideally, you want to have 6 months of monthly expenses saved. Then put whatever else you can towards your debts. Minimize your spending on entertainment and luxury categories, like clothing and fancy dinners. You can use our budgeting resources to help guide you through this process.
To speak to a credit counselor today about budgeting and managing your finances, call 800-769-3571.