How to Refresh Your Budget After the Holidays (Without All the Stress)

liveyourmoneystyle
5 days ago
6 min read

When the chaos of the holidays is over, do you ever feel like you are climbing out of a dark hole? The gatherings are over, food is eaten, presents opened, decorations put away … now the holiday bills start arriving in your mailbox (or email inbox). You finally see how all your shopping impacted your finances. According to Deloitte's 2025 Holiday Retail Survey, Americans expected to spend an average of $1,595 on holiday-related expenses this season and many put a significant portion on credit cards. It might be tempting to hide the bills and ignore them, but that's not reality.

I'll walk you through how to refresh your budget if you overspent during the holidays. This also includes how you can prepare for the following year to avoid another year of overspending.

Assess the Holiday Damage

You want to start by calculating exactly how much was spent during the holiday season. Don't leave anything out during this process. Include the gifts, travel, food, holiday events, and charitable donations. Once you understand where you spent your money, then you can assess where you might have overspent. This serves as your starting point.

Bonus Tip: Think about those sales where you shopped for gifts for someone else but ended up buying something for yourself. Was it worth it?

I have definitely overspent before on gifts for my daughter. I get caught up in the excitement of Christmas and end up buying one too many toys. This year, I made a list of each of the items that I was purchasing for her and stuck to a budget. So when that next toy, book, or game popped up that I thought she would like, I looked at my list to see if there is something that I could return so I wouldn't overspend on her. Seeing the numbers on a spreadsheet really helped keep me in line!

Identify Areas to Cut Back to Refresh Your Budget

If you did overspend and need to pay a credit card bill, then you might consider looking to temporarily cut back on your expenses so you can pay off your holiday spending as quickly as possible. These reductions don't need to be permanent, but rather a temporary reduction to avoid paying high-interest credit card bills. You want to avoid paying interest on a credit card!

Here are some practical ways to temporarily reduce spending:

Go out to dinner or get takeout one (or more) fewer times in a month. This simple change can save $50-100+ monthly depending on your habits.
Pause a streaming service subscription for a month or two. Online streaming services like Netflix, Fubo, and Disney will allow you to pause your account.
Avoid shopping for things like clothes and shoes that aren't necessary items for a month or two. Instead you might use store gift cards that you may have received as gifts.
Find zero cost activities. Going for walks, visiting libraries, or attending other free events in your area are great alternatives to paid entertainment.
Bring your lunch vs buying it out at work. This can easily save $10-15 per day, which adds up to $200-300 per month.

Your discretionary expenses may look different from the ones listed above. Go through your expenses to review what you spend your money on. And, look for those items that you can easily pause for a month or two to help you pay off your holiday spending.

Bonus Tip: You might consider selling unused gifts to earn a little money or taking on a short-term side hustle to temporarily boost your income!

Check out these two podcast episodes on side hustles to learn more:

Tackle Holiday Debt Strategically

If you used your credit card to help pay for your holiday purchases and can't pay them off in full, then you should make a plan to pay them down efficiently. We recommend you pay off your debt using the avalanche method meaning you pay down the balance that has the highest interest rate first. If you are more motivated by seeing account balances go down to zero then the snowball method might be right for you as you will target paying off the lowest balance first. This is not the most efficient financially, but can be very motivating.

Need help? You can use our free Crush Your Debt Tracker.

Review and Adjust Fixed Expenses

If you need to do a little bit more for your budget, then reviewing your fixed expenses is a good opportunity to look for additional savings.

Some suggested areas to review are:

Insurance - You might look for ways to reduce your auto or home insurance. It could be switching providers. Or, for things like auto insurance, if your credit score has improved or you have moved then there might be cost savings to be had.
Subscriptions - Review all the subscriptions that are automatically being paid on a monthly basis. The number might surprise you. Everything from streaming services, subscription boxes, car wash memberships to content. Do a quick assessment to make sure you are using all of the memberships. In addition, a lot of credit cards are offering free access to some services. So make sure you are not paying for something that you could be accessing for free!
Housing - If you own your home you might consider whether you should refinance your house. Depending on the interest rate that you have on your loan it might be worthwhile to refinance your home. Check out this blog article where we dove into this topic in detail: Should You Refinance?

Build in Budget Flexibility

One of the best ways to prevent future budget stress is to create buffer room for unexpected expenses. Consider adding an "irregular expenses" category to your budget for things like car repairs, medical co-pays, or last-minute gifts. Even setting aside $50-100 per month can prevent one surprise expense from derailing your entire financial plan. Think of this as your financial cushion. It's there to catch you when life throws curveballs, so you don't have to reach for the credit card every time something unexpected happens.

Plan for Next Year's Holidays

It might seem odd to start thinking about next year's holiday spending after just completing a holiday season. BUT, with a little planning now your holiday spending season next year will be a lot less stressful. Consider setting up a sinking fund for the Holidays. By setting aside a small amount each month or paycheck, it makes it a lot easier to pay off the holiday bills when they arrive.

Need a little more inspiration for setting up your sinking fund? Listen to this episode of the Deeply Invested Podcast to learn more: The Best Budgeting Tool You're Probably Not Using: Sinking Funds

Frequently Asked Questions

Q: How long should it take to pay off holiday debt?

A: This depends on your balance and how much you can allocate monthly. Aim to pay it off within 3-6 months to minimize interest charges. Use our Crush Your Debt Tracker to create a personalized timeline.

Q: How much should I save monthly for next year's holidays?

A: Divide your target holiday budget by 12. For example, if you want to spend $1,200 next year, save $100 per month starting now. This way, when December rolls around, you'll have the cash ready and won't need to rely on credit cards.

Q: What's better—avalanche or snowball method?

A: The avalanche method (highest interest first) saves more money in interest payments, but the snowball method (smallest balance first) provides quick psychological wins that keep you motivated. Choose based on what motivates you most (saving money or seeing accounts disappear faster).

Q: What if I can't find enough areas to cut back?

A: Consider temporary income boosts like selling unused items, taking on a short-term side hustle, or negotiating a raise at work. Even an extra $200-300 per month can make a significant difference in paying down debt faster.

Final Thoughts

If you overspent this holiday season, take a deep breath. Everything is fixable. The key is to face the numbers head-on, create a realistic plan, and take action now rather than letting the debt linger. Remember, every small step counts: skipping one dinner out, pausing a subscription, or setting aside just $50 a month for next year's holidays adds up faster than you think. The habits you build now—whether it's tracking your spending more closely or being intentional about your financial goals—will serve you well beyond just recovering from the holidays. You've got this, and your future self will thank you for taking control today.

Ready to crush that debt and start fresh? Download our free Crush Your Debt Tracker and let's make this your year of financial confidence!

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