Have you ever spent more money than you wanted to? Just nod your head up and down with me. Yes you have. But so have I and many other people in the world. We’re not alone in this.
The great thing about going over budget is it’s not the end of the world. It isn’t difficult to recover from a period of overspending either.
A few short term fixes and building some long term habits will go a long way in gaining back control over your money. Even if you do overspend again – which will happen – you’ll be equipped with the tools to recover even quicker.
Here are 8 super simple ways to recover from going over budget and overspending your money.
Table of Contents
- Assess The Financial Damage
- Follow A Plan
- Supplement Your Income
- Find A Money Buddy
- Remove All Temptations
- Pay With Cash
- Start A Side Hustle
- Conclusion
Assess The Financial Damage
And fast. Take a few minutes to sit down and look over all the bills, credit card statements, and receipts for the period of time in question.
Sometimes what we think we spent and the actual amount can be vastly different. Actually write down what you bought or paid for. Did an annual membership renew? Was it an unexpected medical expense that came up? Was this purchase a result of an impulse buy?
Get everything down on paper and record the total amount of debt to be paid. This is the new short term goal to apply your 100% focus on.
Follow A Plan
Just as there supposedly is more than one way to skin a cat, there is more than one way to plan. This plays right into the concept of personal finance – key in on the word “personal”. It only has to work for you.
Here are a few plans you can implement towards your debt repayment.
Debt snowball. A method in which you list your debts from smallest to largest and apply all extra money towards paying off the smallest debt first. Meanwhile, all the other debts receive minimum payments. Then, once the smallest debt is paid, continue onto the next debt in line.
Debt avalanche. Similar to the debt snowball method but rather than paying off the lowest debt balance you’ll pay off the debt with the highest interest rate first and work towards the lowest interest rate last.
Balance transfer. The process of repaying existing debt with a new credit card. It works like this. Transfer the high-interest debt from one credit card to another card with a substantially lower interest rate. This can help apply more payments toward the principal balance instead of the interest charges.
Debt consolidation. Not recommended but it is possible to take out a personal loan to assist with paying off debt. Typically, personal loan interest rates are lower than credit cards so more of your money can go towards the principal balance. Another “hidden” benefit is having a loan can help with credit diversification and possibly boost your credit score.
Write it down. This isn’t a plan, this is the most important step if you want to be successful. No matter what route you go, get all your notes down on paper before actually executing the plan. I can’t tell you how many times I’ve forgotten an important step because I kept the entire strategy in my head.
Supplement Your Income
Now would be the perfect time to get creative and think outside of the box. Look for ways to add just a little more income to your bottom line today.
“One man’s trash is another man’s treasure”
– English Proverb
Many have found success selling off their unused items like clothing, old toys, household goods, and electronics. Hold a garage sale or if you want to be extra resourceful, list them on eBay. It’s simple and easy to post your items online. If they don’t sell in a few weeks, go ahead and relist them again.
Another great idea – if your area allows it – is to redeem recyclables at the local recycling facility. Not the most lavish ways of making an extra buck but it helps. Believe me, I was the guy carrying two large garbage bags full of cans and bottles to my work truck every week from work.
Everyone used to look at me as if I was strange for doing it. At the end of every month, I’d make close to $100 just for enduring a few weird looks from my counterparts each week. Not too bad if you ask me.
Find A Money Buddy
Being accountable to someone else can force you to stay true to your word. It could be anyone in your circle of relationships but choose wisely. Pick someone you honestly feel will recalibrate your bad spending behaviors.
It could be anyone from a friend to a social media group to your significant other. Regardless of who it is, that person needs to know what you’re financially dealing with so they can better suit your needs. They need to fill the gap of discipline that you lack.
Remove All Temptations
If you’re constantly buying into the newest fashion trends, it wouldn’t make sense to expose yourself to all the coolest fashion social media accounts out there. That defeats the whole purpose we’re striving for.
Eliminate the distractions, put on the blinders, keep your head down, and kick that debt out of the equation. If you find fulfillment in buying those items, then those are deeper issues that need to be addressed and fixed immediately.
Look for satisfaction elsewhere like the joy you’ll feel once you see that big fat zero in the total debt column. It won’t happen today so enjoy the journey as you go. Understand your needs and your wants. Paying off debt is an absolute need.
Pay With Cash
When all else fails, lock up the credit cards and resort to using cash only. For all purchases – besides the large payments like mortgage – pay with cash and recognize how that makes you feel.
You’ll be more aware of your spending habits and gain clarity on the flow of money. Using a credit card encourages overspending while paying with cash makes it way harder. Even those seamlessly small purchases will force you to second-think breaking that twenty dollar bill on a two dollar item.
If you’re thinking about making this a long-term habit, give the envelope system a shot. This budgeting method allows you to delegate your monthly income to each budget category. By keeping your money stashed away in envelopes, you’ll quickly know how much is left for each category.
Start A Side Hustle
Many people have a side hustle that provides them income to use for paying off their debt. The possibilities are endless as to what you can do. One piece of advice: “Don’t limit yourself on what you’re capable of doing.”
There are a group of friends who started their YouTube channel filming themselves making insane trickshots. Now those guys are touring the world, promoting their brand, selling mobile apps and merchandise. That all started from just giving their idea a try.
Be like me and try starting a blog. Currently, I’m making an astonishing zero dollars from it but this keeps me out of financial trouble. The more time I spend creating new content, the less time I spend browsing Amazon or, even worse, eating all the delicious food Japan has to offer.
Conclusion
Overspending is much more common than one might think. But knowing there are ways to recover from going over budget can shed light on the brighter side of life. It’s tough but it isn’t impossible. Take the proper steps toward change now and get back to living the life you deserve.
What do you often spend more money on? Has overspending ever happened to you? What recovery method did you try?