How to Cure Holiday Debt and Overspending

Overspending seems to happen pretty much every year. This year, about 42% of Canadians overspent. The average amount across Canada was about $530. What that means to me is that many Canadians had a budget, and they budgeted to spend X amount of dollars, but they actually spent more than that.

Ben: Hello everyone and welcome. This is “Cures For a Holiday Spending Hangover.” My name is Ben, and I’m from Consolidated Credit Counselling Services of Canada, and I’m the Community Outreach Manager.


With us is Jeffery Schwartz, Executive Director here. Today we’re going to talk about a common problem we see with a lot of clients.


Jeff: Hi everybody.


Ben: OK. Overspending seems to happen pretty much every year. This year, about 42% of Canadians overspent. The average amount across Canada was about $530. What that means to me is that many Canadians had a budget, and they budgeted to spend X amount of dollars, but they actually spent more than that.


So, where did this extra money come from? Well, most likely it came from some sort of debt or credit card or something like that. Some even planned to go into debt to finance their holiday spending. Essentially, they partied too hard and they have a “spending hangover” that’s going to last well into January, and maybe even beyond.


So, what can they do? The first thing is stop spending. Stop using credit. Put the plastic away. Maybe use cash for now. The frozen balances are going to be much easier to manage than ones that continue to grow or be added to.


Like with any hangover, you need to stop what you’re doing in order to feel better. If I have too many celebratory drinks over the festivities, the morning after I’m going to feel terrible. So I’m probably going to cut back on drinking. At least for a few days, anyway.


Same goes if I eat too much candy and chocolate during the week of festive dinners with family and friends. I’m probably not going to feel too well after that, so maybe I’ll start eating healthier, or maybe I’ll start going to the gym or exercising, and maybe I’ll start feeling better in the new year.


But with credit and debt, time after time, we keep seeing people taking the “hair of the dog” approach to their holiday spending hangovers. They fall deep into debt and use those credit cards a little too much when they’re doing their holiday shopping. And instead of cutting out credit cold turkey, they take more debt as a solution.


It’s almost like having a Bloody Mary or a Ceaser on Boxing Day. Your bank accounts, the credit card debt levels: those aren’t going to change for the better unless you do. It won’t take any extreme measures. It won’t take any overly detailed planning.


But today we’re going to talk about smart ways to start small so you can start making a big difference. Now I’ll turn it over to Jeff who’s going to talk about how you can make a plan for this.


Jeff: Thanks Ben. Like any great holiday party, if you don’t start cleaning up the night before, there’s going to be a big mess in the morning. To be quite honest, nobody likes cleaning up the mess after a party. Having a hangover just makes it absolutely worse if you’re going to wait until the next day.


Holiday debt can quickly become uncomfortable messes too, so we should take some time to look at ways to clean them up. We want to start by looking at where you spent your money. In today’s digital age, that’s really never been easier.


Start by looking at your mobile banking app. The expense tracking and budgeting software found in your pocket or purse has already done the work for you. Or, you could head to your bank’s website and log in to your online banking and print out a specific date range of expenses. That’s going to tell you where you spent your money. Or, if worse comes to worse, go to the bank and ask a teller to print off copies of your statements.


Some of the things that you want to look at are:


How much did you spend on groceries in December?

How much did you spend on decorations at the dollar store in November?

Which gift cost you the most? What store was it at and who was it for?


A big reason why you need to start planning is so that you can see how much debt you have in dollars and cents as well as where it came from. Then you’ll be ready to set a smart goal.


By the way, paying off my holiday debt is not a smart goal. Getting specific and coming up with realistic numbers and time frames will help you ditch this hangover now and in the future.


So, instead of trying to pay off my holiday debt, why not write down a smart goal? Try something along the lines of putting an extra $50 on top of my Visa cards minimum payment this month with the money that I saved from not going out to all sorts of different entertainment.


Now, can you afford that extra $50? If you found yourself with an outstanding debt from this year’s holiday spending, then there’s a good chance that you don’t even know. But don’t worry. In this case, a budget can really be your best friend. I’m going to throw it back to Ben about a throwing a budget together.


Ben: Thanks Jeff. That really is the first step in any financial situation: making a budget. A common mistake we see is using last year’s budget almost as a future planning tool for next year.


If that might be you, ask yourself, when it comes to holiday spending, how did that plan go last year? If it went well, great. If it didn’t go so well and you had a holiday spending hangover last year, then you’re going to have to change this year. So if it didn’t go well, or if like other people you never had a plan to begin with, that’s a good sign. Now you can start from zero.


Don’t worry about not having a budget or not having the tools. First, use our budgeting tool to figure out your monthly expenses. So here we see a quick breakdown. These aren’t hard and fast rules. This pie chart is really just a guide.


Do you find yourself within these ranges? Some of these things can vary greatly depending on what city you live in, how much food is, if there’s any dietary restrictions. That sort of stuff. But these are some pretty good guidelines.


So, where are you spending your money? First, we want to use our budgeting tool to figure out the monthly expenses, and we roughly want to categorize those into a few different categories.


The first would be your fixed expenses. It’s the same every month. Every month your rent, your car insurance, it’s the same amount every month.


Then we have things that are a little bit more difficult to track: flexible expenses. Those are expenses that might change season to season or month to month. This could be things like gasoline, or medical expenses, maybe some vehicle expenses, and that sort of thing. You’re not getting an oil change every month but you’re probably getting an oil change maybe every 5,000 to 10,000 km. So you need to have a plan for that as well. As well as any other annual or semi-annual commitments you may have, maybe if you pay your car insurance annually or something like that.


So, if paying down debt is your goal, it’s essential that you add your debt repayments as a line item in your budget. Like any other categorized expense, it will probably be a fixed expense. If you have a little bit of extra cash, say $100, that $100 is a fixed expense and it’s in your budget and it’s going toward debt.


It’s not mandatory, but the next step might be prioritizing these expenses. That’s going to help you look for where you can save. So the best thing to ask yourself is, “is ‘this’ more important than ‘that’?” For example, is paying my rent more important than going to restaurants? Probably. So those types of things can help you identify where you might be able to save.


So, if you are going to a restaurant, or maybe you want to order Uber Eats, maybe that’s more important than paying your internet or cell phone bill. But is it? For most people, it’s probably not. Is paying your rent more important than going on a Caribbean vacation? Probably.


Your answers might not yield any earth-shattering results by doing that, but that’s not what they’re meant to do. They’re meant to help you with two things:


  1. You understand where your money’s going
  2. To help you understand how much of your money is going where.


You can find out things like how much money do you spend each month on discretionary expenses? How much money do you spend on entertainment? How do you spend on restaurants? What did you spend on take-out food? How much are you paying for TV, internet, cell phone? That sort of stuff.


Now you can see where your money is going and you can see where you can start to save.  What can you cut out completely? That sort of thinking.


The next thing you need to do is actually start doing this. You need to start doing this today. That’s where Jeff comes in and that’s what he’ll talk about now.


Jeff: Thanks Ben. And really, there is no better time than the present. We could all wait until our statements come in, and then hum and haw, and decide about whether we’re going to start that day or the next day after we received our statements.


But the problem doesn’t go away. You really want to start doing something today while you’ve got the enthusiasm and motivation. Start today. I know this can be tough for some, and it’s not for everyone, but the facts are still the same. You need to do something and you need to do it now.


Don’t be tempted to just make the minimum payment on each bill. That’s a trap. And it’s only going to make your situation worse. The majority of each minimum payment goes towards interest and fees that you may have incurred. It really does nothing to reduce the principal that you owe and have outstanding.


This happens a lot, and often people justify it to themselves by saying things like, “I just need some time to catch up,” or “once work picks up I’ll have no problem paying them off.” This could be a time to look for some extra income. This could be any passive income you receive, such as bonuses or commissions, tax refunds, gifts, or inheritances.


Or perhaps you’re a little more proactive and are willing to look for a second or part-time job driving for a car-sharing service, or even sell some unused sports equipment, electronics, or other valuables. We all have these old cell phones in our drawers tucked away, but they’re worth money to somebody. And this may be an easy way to grab some money and plunk it down against your debt.


Whether it’s $5 or $500 added to the minimum payment, try your hardest to save as much money as you can – using your new budget of course – and put that money towards your debt.


Coming up with a plan of attack will be the next step. If holiday debt is the issue at hand, then we need to find a way to put your money to work so that it pays off the debt in the fastest and most efficient way possible. There’s certainly more than one way to pay off high-interest debt. But for our purposes, we’re going to talk about two methods that might work for you. The bottom line is that you need some sort of plan to maximize your debt repayment so you can put your holiday overspending behind you.


The first, and what we call the more powerful one is called the “tiger style.” Please pay attention to the sensei on the screen. Firstly, you want to make a list of all your debts and write down the balance and the APR (interest rate).


Prioritize these debts as we’ve done up here from the highest APR to the lowest. So the Capital One has an APR of 28.99% while the Visa has an APR of 14.99%. Make minimum payments on all your debts except the one with the highest APR – the Capital One in this case. Make the biggest possible payment against the one with the highest APR debt. Keep that up until the debt is gone.


Then move on to the next highest APR debt. As you eliminate each debt, you free up more money to pay off the next. So really, this accelerates the whole process until you reach zero on all of your balances.


So now I’m going to hand it over to Ben to talk about another style that might work better for you. But really, it’s up to you to pick which one works best.


Ben: So the “tiger style” works well for you if you have some free money, or you’ve sold some of those valuables, or you’re driving with a car-sharing service, mowing lawns, whatever it is. That could work for you.


But if you take a look at that and you decide that’s not going to work for you, maybe you don’t have that kind of payment to put down, maybe you’re just looking for an easier win. You might want to look at the “crane style.” You want to peck away at your smallest debts. You want to gain some momentum, gain some confidence. Start targeting the lowest balance. Again, using that same example, “crane style” would look something like this:


The lowest balance that we have is $826 and it’s at the lowest interest rate. So that’s perfect. We put the same $400 payment on that. In two or three payments, you’re going to be able to pay that one off.


Again, using your extra money from paying that debt off, putting it on to your next debt, the Mastercard here, now you’re going to be able to build that momentum, start knocking off your lowest balance debts and start getting those wins.


Like Jeff said, it really doesn’t matter which style you pick, you need to commit to a cure. You need to stop the bleeding. You need to come up with some sort of plan.


Just because some of the stuff you saw here today looks simple: a budget, how can I tackle my high-interest debts, or my lowest balances, that sort of thing – those are simple, but that doesn’t mean it’s easy. You need to start somewhere, and you need to start doing it today.


If you need help, there are people out there who are ready to speak to you. A trained non-profit credit counsellor would love to talk to you. They can go over a monthly budget snapshot with you. They can recommend areas for savings.


If they see any areas where you might be overspending, they can highlight that and make suggestions. So, if debt is an issue, the credit counsellor can go over a detailed debt assessment with you. They’ll recommend a plan.


Maybe it’s the tiger style. Maybe it’s some sort of insolvency or bankruptcy. Hopefully not. Either way, they’re going to come up with some sort of a plan for you.


Of course, you might have a trusted financial advisor, someone you’re OK speaking with about your money. Maybe you want to speak to them and let them know your situation. Maybe they can help you manage your money and develop a plan to avoid or even pay off debt.


But the most important thing to remember is that there is help out there – all you need to do is ask for it. Jeff, is there anything you wanted to add to getting help?


Jeff: No, not at this time. Truthfully, I think you’ve covered everything. But I think going back to what you said earlier on, the key is to start today. Let’s not put it off any longer. If you’re having trouble managing one of the styles that we talked about, or even putting a budget together, there are some great resources out there.


Just search on the web. Go to and reach out to a counsellor in that way and they’ll be able to get you started at no cost.


Ben: Thanks everyone for watching, and we’ll just do a couple of questions. We get the same questions, so some we should take the time to go over. One would be, and we hear it quite often, “I have no money at all. I used credit to pay for all of my shopping and buy all of my presents, and now I’m in over my head. Where do I start?” So Jeff, for someone who’s feeling overwhelmed like that, what would you recommend?


Jeff: Well, you’ve got to start somewhere. Putting your head in the sand is not the way to go. If we really take a close look at our budget, we probably all have some sort of room to save. We have to start with something like entertainment or food. Is there any way we can save on that? Maybe we’re cutting down on our meat intake, or some of the more expensive grocery items just to try and save some money there.


And you’re also going to need to make debt repayment a priority. It’s got to be right up there with food, shelter, and utilities. Can you pay your debt payment first? Make it your first payment. And better yet, make it invisible and automatic.


And what we mean by that is it’s got to be a line item in your budget. So why not make it a priority and have it automatically deducted out of your paycheck each and every month. Then you’ve got to manage the rest of the money that you have available to you.


This is something that you can easily set up with your bank. Or even through your online banking. Whether it’s $5 or $500, what matters is that you start today. And that really is creating the behaviour, and that kind of leads us to our next question.


Ben: This is a question I get a lot when I’m out doing my workshops and seminars. And it’s, “should I save money or should I pay off my debt. What should be my priority?”


Jeff: The answer there is “yes.” You want to do both if you can. But let me elaborate on that.


Many people go into debt because they have no emergency savings. This is a big one. Life is going to happen regardless of what’s going on, good, bad or indifferent. Life is still going to happen and it can be expensive when it does. You’re going to have something happen that’s unexpected.


But if you’ve saved up some sort of emergency savings before the emergency, then you’re not going to have to finance it with your home or anything else. You’re not going to have to go further into debt to pay off that car repair, or that emergency leak in the roof, or that medical issue. You’re not going to have to pay it off with a credit card or a loan because you’ve built up some sort of emergency savings. So in effect, that’s going to prevent you from going into debt.


So it’s important to actually do both: pay off debt and put a little bit aside for some emergency savings further down the road.


Ben: Great! If you had any other questions, feel free to connect with us. Thanks for watching. You can catch us on Facebook or tweet us on Twitter. You can also contact us at the number below or send us an email to that email address.


Or like Jeff said, you can head over to We’ve got a lot of great free resources in the debt learning centre. So take some time if you need help coming up with a budget or figuring out a plan for your situation, please give us a call. Speak to a non-profit credit counsellor. And like we said, there’s no cost for that.


So that’s all for now. Thank you for joining us, and have a great rest of your day!

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