We’ve talked about preparing for the holiday hangover previously. As the holidays continue, your budgeting plans may be going two ways:

• Proceeding as planned.
• Needing some course correction.
  

Still being in “holiday mode” right now is completely fine! On the other hand, it might be a good idea to take a breather and see how you’re doing. Being proactive on upcoming bills ensures you’re in a good place to address your finances once January rolls in.

It may be a good idea to anticipate a post-holiday recovery. This entails planning to return to a firm financial footing as the New Year begins. Knowing what to do ahead of time will do much to put your mind at ease as you return to the daily grind.

Here are a few ways to plan your finances so you may begin the following year with a running start.

Assess and Prioritize Your Outstanding Balances

Credit cards remain a popular payment method, allowing consumers to buy what they want now and pay later. This convenience also makes it very tempting to run up an excessive balance.

If you have more than one loan or line of credit, you’ll have to be proactive in paying down multiple balances simultaneously. Now’s a good time to check up on your accounts and decide on how you’ll pay down your debt.

There are two popular ways to pay down credit card debt. They are:

• Snowball Method: Pay your smallest outstanding balance first. Then, work on the next-smallest balance.
  
• Avalanche Method: Pay down the account with the highest interest rate first.
  

As you work on the “highest value” account, make the minimum payments on the others. Move on to the next-highest account once the previous one is paid off.

There is no “wrong” way to approach paying down multiple debts. However, having more than one outstanding balance can put you in a debt trap. Interest charges add up quickly, especially if you only make minimum payments with each passing month.

Try a Balance Transfer

Consider a credit card balance transfer if handling multiple credit card accounts is overwhelming. This is a process where you transfer your outstanding balance from one card to another.

There are two key advantages to opting for a balance transfer:

• Consolidates debt: You will manage fewer accounts, making it easier to keep track of payments.
  
• Reins in interest: Transferring to an account with a lower interest rate also means you will pay less over the life of the balance.
  

Some financial institutions offer credit cards with free balance transfers. This is a great way to get a fresh start while also getting a little more organized.

Take Advantage of Windfalls

A “windfall” is any money you receive that wasn’t factored into your budget previously. Depending on your situation, the holidays may have granted you a boon that wasn’t part of your plans.

Some examples of windfalls include:

• A bonus from work
• Pay for working overtime
• Monetary gifts from relatives and friends
• Winning a scratch-off ticket or two 

While some people may be tempted to spend money they just received unexpectedly; this source can reign in debt or provide a head start on any savings goals you might have.

Instead of spending money from a windfall immediately, use the extra cash strategically.

The America Saves campaign by the Consumer Federation of America recommends using a windfall to bolster your finances. They propose the 30/40/30 method when administering the extra money:

The 30/40/30 method involves separating the total amount of your windfall into three buckets:

• 30% of the money goes to The Past. Use this portion to pay down outstanding debt.
• 40% goes to The Present. Use this amount to pay for living expenses, needs, and wants.
• 30% goes to The Future. Use the remainder to start or contribute to an emergency fund so you are better equipped to handle any of life’s changes.
  

Of course, you can tune these proportions according to your needs and financial goals.

The holidays are almost over, but they also provide an opportunity to look towards the future. As the New Year approaches, doing what you can to strengthen your financial footing will help you achieve your goals.

First Florida is here for you at each stage of your financial journey. Members have access to free financial counseling services. Check out the GreenPath Financial Wellness program to learn more.