For most people, Christmas is considered the most jubilant time of year for both young and old. Most of us are excited to finalise the year of work or school and devote some quality time with family and friends. They don’t refer to it as the silly season for nothing either. Eating and spending too much is the norm and it’s really easy to lose track of your savings and your waistline! Enjoying a hard-earned holiday is crucial for our mental health, so it’s easy to overindulge in presents and vacations during the festive season. But alas, the new year comes around soon enough and we can all start a fresh slate. Time to make some resolutions and prepare for the year in advance.
Before we realise it, we’re back in the same habits. Work, school, bills, stress. But what if you’re in the situation where you spent a bit too much throughout the festive season and now you’re in debt? Well, don’t be unnerved, it happens to plenty of people during this time of year. The good thing is we’ve got some techniques on how you can efficiently repay your Christmas debts in a timely fashion.
Make a list of your debts
The first step in clearing your Christmas debts is to evaluate how much you owe. Get hold of a pen and paper and list each of the debts you have, alongside the creditor’s, interest rates, next repayment date and repayment amounts. Try to be conservative here and list every single debt you have, irrespective of how big or small. After you’ve figured out your repayment amounts, you’ll need to devise a plan on paying off the principal, which brings us to our next recommendation.
Remember that debts are composed of both interest repayments and principals. Paying the interest only will doing nothing long-term, so when you’ve determined your repayment amounts, the next step is to devise a plan on paying off the principal. It’s always best to concentrate on the highest interest rate debts initially which will save you money in the future. Interest on loans are a powerful force and can maim your finances if you don’t take care. You likewise might wish to list your income streams simultaneously so you can work out how much will be left over for living expenses. This will assist you in our next tip, creating a budget.
To ensure you can continue to enjoy the year ahead, you’ll need to repay your Christmas debt inside the first quarter of the year, so putting together a budget and adhering to it is essential. If you’ve had difficulty following a budget before, there are plenty of great smartphone apps that can help you with sustaining your budget. Just because you’re on a budget doesn’t mean you can’t have any fun either. There are plenty of free and low-priced activities available, you just have to adjust your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
While it may sound apparent, the easiest way to pay off debt is to grow your savings and keep away from unnecessary expenses. You might choose to stop dining in restaurants once a week which can save you a surprising amount of money. Or you can catch public transport to work to save money on fuel. If you feel inclined, cut up your credit cards! Do whatever you have to do to save money – being prudent is very important. Get in control of your spendings and save as much as possible; you don’t want your holiday debt hangover to continue until next Christmas!
Monitor your progress
Evaluate your progression every month to discover how well your plan is performing. You might intend to make some changes if required, and you’ll have a better idea of what changes are rational based on the previous month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to commemorate your achievement. A reward doesn’t need to cost an outrageous amount of money, but it will increase your motivation to stick to your plan in times of need. By budgeting and tracking your progression, you’ll have better financial skills and hopefully won’t be stuck in the same position next Christmas!
If you can’t manage your debts, seek advice immediately
If you’ve honestly tried to at least decrease your debts in a timely fashion and haven’t been successful, you may be experiencing financial hardship. Instead of waiting and paying an increasing amount of interest, it’s better to seek advice from the experts before your situation gets worse. There are many options available for those in financial hardship and they vary according to your individual circumstances. For a confidential discussion on how to appropriately manage your debts, call Bankruptcy Experts Wyong on 1300 795 575 or visit www.bankruptcyexpertswyong.com.au