Bouncing Back After a Back-to-School Spending Spree

Keep reading for advice on how to handle the unexpected without credit and how to rebalance your budget to pay off debt quickly, after a back-to-school spending spree.

Credit: Drazen Zigic via Freepik

Back-to-school season is a busy time for your family — and your budget. Your kids are expected to arrive in the classroom with backpacks full of supplies while wearing new outfits they’ll grow out of any second. So you do what millions of parents do every fall; you put your back-to-school shopping on credit, maxing your account with new tech, supplies, and clothes.

According to the National Retail Federation, back-to-school spending will reach a record high this year, with families of grade-school kids spending nearly $900. Roughly one thousand dollars tying up your limit can be hard to handle. For families like you, it can be tough to pay it off quickly, so this balance could remove your credit card as your safety net for a while.

So, what can you do? Keep reading for advice on how to handle the unexpected without credit and how to rebalance your budget to pay off debt quickly.

Handling the Unexpected without Your Credit Card

A high balance or a low account limit can mean your back-to-school shopping spree ties up all your credit’s purchasing power. Until you pay off this balance, you can’t rely on this account in emergencies as usual.

Unfortunately, emergencies don’t wait until you’re ready. Your car can break down while dropping off the kids on their first day of school.

Without your usual credit card for help, you need an alternative safety net. Some people have friends and family who can help them in a pinch, but not everyone is so lucky. If your loved ones can’t help, consider borrowing an online loan. Online loans are convenient for busy families, as you don’t have to leave your home to borrow cash if you’re approved. You just have to share your banking info to receive quick online money.

Paying Off Your Outstanding Balance

Knowing you have a safety net in online loans can provide peace of mind, giving you the energy to focus on your debt. Paying down a balance of any size can be challenging, so here are some best practices to help you find your way.

1. Always Pay Your Minimum

When you’re first starting out, you want to make sure you make your minimum payments at the very least. This will help you avoid late fees, keeping your account in good standing.

2. Choose a Debt Payment Style

Knocking out debt is easier when you follow a strategy. In the financial world, the two most common strategies include the avalanche and snowball debt methods.

The Avalanche Method says to focus on the account with the highest interest rate first. Once you pay off this account, you move down the list to the next highest.

The Snowball Method advises you to concentrate on the smallest balance. You move to the next biggest balance once you clear this first debt.

3. Ask for a Limit Increase

If you’ve been a responsible borrower so far, ask your card company if they’ll increase your limit. This may affect your utilization ratio, a credit-impacting figure that shows the percentage of your overall limit you use.  As long as you don’t add purchases to this account, an increase may reduce your ratio, which looks good to most credit scoring models.

Start Budgeting

Now, all that’s left if is making a budget and finding cash you can use to follow one of the debt payment methods outlined above. Focus on spending less on entertainment, alcohol, subscription services, clothes, and travel expenses until you wipe out your debt.

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