Now that summer is over, you may be dealing with debt from those warm-weather activities and pricey vacations. According to Nerdwallet, families spend $2,256 for a family vacation, and charge more than $1,000 to their credit card.
“Any time you come off of an expensive season like the summer, it’s important to review your finances and give them a checkup,” says Andrea Woroch, a consumer finance expert. “You want to clear out debt and boost your savings to put yourself back towards reaching those goals you’ve set for yourself.”
While it might be tempting to wait until the new year, Woroch says it’s better to start now, before the holiday season—and spending—creeps up on you.
“Fall is a great time because it’s in between these expensive spending seasons,” she says. “Ahead of the holiday season, if you don’t pay down that debt [from summer], you’re just going to put yourself in a worse position.”
Here is Woroch’s five-step fall financial checkup:
Step 1: Review your expenses
The first step to fixing your finances is knowing what you’re dealing with. Woroch says it’s time to look at your credit card balances and see what you’ve spent, what you owe, and what the interest rates are on your cards so you’re not hit with extra charges.
“The sooner you face that damage you’ve done, the better chance that you can have it paying it down faster,” she says.
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Step 2: Track your spending
Being aware of how much you’re spending and what you’re spending it on can help you determine what you can do with your funds. Woroch recommends tracking your spending with an app like Mint or even writing it down in an Excel spreadsheet. You can also take a look at your bank accounts, as they often provide a breakdown of where your money is going each month. If you need to make a budget, this is how to set a budget and stick with it.
“This will give you a better idea of where you’re overspending in your budget and also give you an insight into your saving habits and where you need to improve,” she says.
Step 3: Trim costs
It may be time to cut back your spending if you need to start paying off debt. But it’s not always the largest expenses that make the difference, Woroch says.
“Consumers will look at larger expenses to figure out how to save but oftentimes it’s smaller recurring expenses they’re not aware of that add up,” she says.
Monitor your bills and bank statements for charges you don’t use and cancel them, like magazine subscriptions or gym memberships. You can also call your utility and cable companies to lower your monthly bill, saving a small amount each month using a site like Billcutterz, which negotiates your rates for you.
Step 4: Pay off debt
If you do have debt, start tackling it now.
“You want to assess how much you owe across the various credit cards to make a debt repayment plan,” Woroch says. “Figure out how much you can afford to pay each month and then determine your goal from that.”
Woroch says you can take on the smallest debt first, so you feel motivated and accomplished, or tackle the card with the higher interest rate so you’re saving more money over time. In both scenarios, seeing your debt decrease will keep you on track.
Step 5: Boost your savings
Finally, start to pad your savings account and emergency fund, Woroch says.
“It’s important to now reboost your savings—chances are you depleted your savings to pay for various trips and seasonal expenses.”
Woroch recommends opening a high-yield savings account, which will earn you more interest than a traditional savings account. You can also set up automatic transfers into your savings, which takes the work out of saving a little more each month.
The bottom line: start now!
“Once you get started you’ll start feeling more motivated: as you see your debts shrinking, as you see your savings growing, by the holidays you should feel in a much better financial position,” Woroch says. Want to spend less time on your finances? Here’s how to think about your money for less than an hour a month.
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