After a good night of partying and hanging with your best girls you wake up with a pounding headache and severely dehydrated. You immediately know that you have a hangover, so it's straight to the aspirin and Gatorade along with making love to your bed and pillows for the rest of the day.
When you finally wake up from hangover hell, you check your finances and notice that your bank account looks like it needs a healing.
Do you remember what happened?
Was it continuous impulse shopping and spending like you had no responsibilities?
Or was it ignoring financial obligations because you felt lost and overwhelmed?
Maybe it was those countless happy hours and day parties...
If you are delaying payments to lenders, nearing or over your credit limit, have little to no cash flow, borrowing funds, and dodging bill collectors – you my friend are suffering from what I like to call a Financial Hangover. Just like a regular hangover doesn't happen after one drink, neither does a financial hangover. It usually comes from a series of actions or lack thereof. However, it's not too late to turn your finances around.
Here are some options to help cure you of your over-spending financial hangover misery:
Go on a Spending Ban
We're a little more than half way into 2016 and hopefully your financial goals for this year are underway. As part of recovering, go on a spending ban aka a spending diet. It's exactly what it sounds like. You have to STOP spending. More specifically, you have to restrict yourself in order for your pockets to successfully recuperate. While on the ban, you have to refrain from purchasing non-essential and non-emergency items. This means no eating out, no shopping, cups of coffee, etc. Buy only what you NEED and create a realistic plan to tackle the debt you've incurred during your reckless spending. I assure you that once you see how much you were able to save, you will want to adjust your money habits. Once you get the hang of a spending diet, consider taking one every few months and using the money saved to pay an existing financial obligation.
Put. The. Credit. Card. Away.
Swiping left and right is probably one of the reasons that got you to this point. People tend to swipe first and think later because the consequences aren't immediate. Opt out of using plastic and incorporate a cash system. Using cash only forces you to be more of a conscious spender. When you see the money leaving your hand, you tend to think twice before making a purchase. Consider the envelope method which is a form of budgeting by taking the cash allotted for specific budget categories (ex: groceries, entertainment, dining out, etc.) and placing them in envelopes. When it's time to purchase these things, use the money placed in the envelope. Guess what? When it's gone…. It's GONE. So plan and budget wisely.
Stick To Your Budget
If it's not in your budget, it's not for you. Be careful not to become Budget Breaker Bertha. Bertha likes to plan and budget her butt off but she lacks follow through. If you are committed and serious about achieving results, you have to set a realistic budget and stick to it. If you only allot yourself $50 for the month to eat out then that's it! Once the $50 is gone, there's no more eating out for you. You will thank yourself later. Get committed to setting a monthly budget in order to tell your money where to go. Remember, you work hard for your coins so you should be telling your money where to go not the other way around.
Put Yourself On Timeout
You might want to steer clear of the late night party hoppin' and after work drinking until you replenish your accounts. Once you feel comfortable where you are financially, you have to plan out how to move forward. Now if you feel obligated and haven't mastered the art of “No" yet then you should budget what you will spend BEFORE you go out. Make sure that your budgeted amount is reasonable and will not have you waking up with second thoughts on how much you spent. If you find that your only reason for doing certain things is to “Keep up With The Joneses" then a time out is warranted so that you can reevaluate your priorities. Remember, the idea is to avoid the hangover.
DO. NOT. REPEAT.
So you've taken the necessary steps to recover and you're feeling better. You are no longer dodging bill collectors, your bank account is in the positive, and you've managed to save some money in the process. Do not repeat the cycle; make better choices going forward. I've declared 2016 the season of sacrifice. To get where we want to be financially, we have to be wiling to change our mindset and do things differently. Tackle the unknown and take on things that seem impossible; being more money conscious is one of them. There's a huge misconception that you have to be ballin' in order to live fab. I'm here to bust that myth and let you know real moneymakers don't stunt.
What are some money habits that have helped you out of your Financial Hangover in the past? Share with us below!
Germeen is a NYC auditor pressing her way through the jungle gym known as corporate America. Her hunger for new experiences is demonstrated in her commitment to live life to the fullest and to empower women to do the same while being financially savvy. For more engaging discussions about money matters and lifestyle choices, you can find her at yourlifeandfinance.com.