Everyone has an unlucky period in their life when expenses pile up. Your car needs work, the roof needs patching, your kids need antibiotics, your dog racks up a pricey vet bill, and you’re still sporting debt from the holidays.
Phew — dealing with all these unexpected expenses all at once can feel like you’re at the whim of chance, making it hard to feel good about your finances.
But don’t worry — you can take back control after such an expensive period. Here are simple tips that won’t overwhelm you as you recover from overspending.
Start Budgeting
Making a budget after you overspend is a great idea. This spending plan can help you feel like you’re back in control of your finances and not the other way around.
The 50/30/20 budget is one of the most popular budgeting methods, and it can be useful following expensive periods. It reserves 50% of your take-home pay for the essentials, 30% for your wants, and 20% for savings and personal loan repayments.
These percentages provide a guideline, so feel free to tweak them to reflect your unique budget. Some people might have to use more money on their essentials. If you’re one of them, take this money from your wants before your savings.
Address the Debt
Did you have to take out an online loan or line of credit to handle your unexpected vet expense or roof repair? Emergency online loans fill an important role in your finances. They help you deal with urgent expenses when you’re short on funds, so you can take care of your dog’s health or your home’s safety without delay.
Paying off emergency loans online makes sense from a recovery perspective. You’ll free up your budget again, so you’ll have more cash to save or splurge. Plus, you’ll minimize how much interest you accrue on lines of credit when you pay off your balance as quickly as possible.
In many cases, you can repay your online loan over the phone anywhere you get a signal. You can even arrange these payments to come out of your account automatically, so you never forget a due date.
Track Repayments Carefully
Your monthly line of credit statement might join a long list of bills. It’s easy to lose track of all your personal loans, credit cards, and Buy Now, Pay Later financing if you aren’t careful. Try tracking these payments by due date and amount so you always have enough in your account when their payment is due.
Don’t Pause Savings Entirely
When you’re recovering from a lot of spending, your first reaction might be to cancel your usual savings contributions. Rerouting this money towards your essentials is a quick way to come up with the cash you need, but it isn’t painless.
Consider your emergency fund balance as a personal KPI. The higher this balance is, the more secure you are. A low balance indicates some difficulties ahead. If you draw from these savings without saving each month, this money will run out eventually — then, you might need to take out more emergency loans in the future.
Your emergency fund needs consistent deposits to grow. Even if it’s just $20 a month, these contributions will help you in the next emergency.
Recovery Doesn’t Have to Be Hard
Try these small tips. They’ll help you get in the mindset for better money management without overhauling your entire life.
