Are you suffering from a budget hangover? You know, when you’ve been spending a ton of money and you kind of lose track of reality. You swear you’re never going to spend again and make a deal with God to be soooo good if you can just survive. I usually feel that way after the holidays or a big renovation project. I don’t care what they tell you, hair of the dog is not the answer!

Like other hangover cures, this one isn’t instant and it may make you feel a bit worse before you feel better but stick with me! In three easy steps, you’ll be back in action…

Step 1: Reality Check

What’s the number one coping mechanism for financial woes?  Denial.  Like, maybe if you don’t check your balance, more money will magically appear so you can do whatever you want.  Maybe if you stuff all of your bills in an old cereal box in the pantry, they’ll all get magically paid.

First, I want you to know you’re not an idiot or a loser just because you’re in a little money jam.  Sometimes we make decisions that serve us in the moment but come back to bite us in the ass later.  This is probably one of those times.  Beating yourself up about it is not going to help one bit.  Just keep repeating this in your head until you feel better:

We know that problems don’t get solved by ignoring them, so let’s face this thing head-on.  We need to gather information.  Round up the following:

• Current balances for checking and savings accounts.  You have to know how much money you have to work with today, or at least on payday.
• Bills.  Gather all unpaid bills like utilities, credit cards, car loans, mortgages, etc.  Make sure you get everything that needs to be paid and make a list with the minimum payments and due dates.

Now, do the math.  Get a piece of paper and draw a line down the middle.  On the left side, write down how much money you have available right now.  On the right side, write down the total from the list of bills that you just made.  Which side is more?  If it’s the left side, great!  If it’s the right, don’t worry, we can work with that.

No. 2 Prioritize and Plan

Our next move is to make a working budget.  If you have way more money than you owe, pay your bills and skip this section, but the rest of us need to prioritize.

Get your list of bills again.  We’re going to do a little triage, just like in the ER.  We have to find out which ones need the most attention.

• Life-Threatening.  Anything that affects your credit:  credit cards, car loans, mortgages, etc.  Letting these things slide can seriously screw up your life.  Circle these in red.
• Urgent.  Things you can’t really live without:  utilities, phone bills, internet.  Not having these things would be pretty uncomfortable.  Put a check mark by these.
• Hold for Observation.  This category is for the little extras:  lawn service, housekeeper, magazine subscriptions, Netflix.  I know you like having these things but you don’t actually need them.

Action Plan

Okay, back to math.  Do you have enough money to pay the Life-Threatening bills and still have enough left to eat?  Whew!  That’s good news.  If not, then you need to get on the phone and make some arrangements.

Seriously, do this today.  On car loans, many lenders will allow you to skip one payment per year and add it to the end of your loan.  Credit cards may allow you to work something out with a reduced minimum payment for a certain period of time to get you back on track.  Your mortgage lender is the least likely to make any sort of arrangement with you, so start with the other ones.  With any arrangements, make sure you know exactly how it will affect your credit.  I know these are scary calls to make, but this problem isn’t going away, so let’s start chipping away at it right now.

If you have enough to pay the urgent bills, that’s great.  If not, it’s back to the phone.  Most utility and phone companies will make arrangements with you to get through a temporary financial crisis.

Now for all the others. If you’re having to decide between keeping the lights on or the phone, you can’t afford extras right now.  That’s okay, once you get yourself situated, you can go back to your fabulous lifestyle!

Now is the perfect time to set up an entire budgeting plan.  To get my free, printable Budget Bundle, check out this post.

No. 3 Spending Diet

“Yes, I’m already on a diet to cut calories, why not cut my spending as well,” said no one, ever.  I know diets suck but they do serve a purpose!  During the holidays or vacation, we get used to eating tons of yummy stuff, without really giving thought to the consequences.  Same with spending:  we just get used to spending so much that it becomes a habit.  We need to give ourselves a jolt!

A spending diet is just like it sounds.  You only spend money on the absolute necessities.  For one month (or more, if you can do it), commit to paying your bills, buying groceries and gas and not much else.  No eating out, no drunky Amazoning, no new outfits, no movies, no Starbucks, etc.  You get the picture.

The benefits of the spending diet are two-fold:  you get out of the habit of spending and you save hundreds of dollars.  Last month, we spent nearly $300 eating out, another $300 on clothes and $300 more on who knows what at Amazon.  That’s $900 we could save this month!  It will be tough and you’ll get complaints, but it will be totally worth it to find out just how much less you can live with.

The Day After the Day After

You know how you wake up the next morning after a terrible hangover and you’re like, “OMG, I’m actually going to live!”  That’s the feeling you’ll have after tackling your budget hangover!

Moving forward:

• Stick to reality, don’t stick your head in the sand.
• Look at your bank balance every day while saying, “I’m a smart girl.  I’m a sweet girl.  I’m a pretty girl.”
• Pay your bills first and on time, have fun second.
• Take a break from spending every now and then.

Any hangover advice for me?