For most people, Christmas is seen as the most joyful time of year for both young and old. All of us are ecstatic to finalise the year of work or school and spend some quality time with family and friends. They don’t refer to it as the silly season for nothing either. Eating and spending a bit too much is the norm and it’s pretty easy to lose track of your savings and your waistline! Taking a hard-earned break is fundamental for our mental health, so it’s easy to overindulge in presents and holidays during the festive season. But alas, the new year comes around soon enough and we can all start anew. Time to make some resolutions and plan out the year ahead.
Before we recognise it, we’re back in the same schedule. Work, school, bills, stress. But what if you’re in the predicament where you spent way too much in the course of the festive season and now you’re in debt? Well, don’t be alarmed, it happens to many people during this time of year. The good news is we’ve got some recommendations on how you can effectively repay your Christmas debts in a timely fashion.
Make a list of your debts
The first step in clearing your Christmas debts is to discover how much you owe. Get a pen and paper and list all of the debts you have, coupled with the creditor’s, interest rates, next repayment date and repayment amounts. Try to be conservative here and list every debt you have, regardless of how big or small. When 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 suggestion.
Always remember that debts are composed of both interest repayments and principals. Paying the interest only will doing nothing long-term, so when you’ve worked out your repayment amounts, the next step is to make a plan on paying off the principal. It’s generally best to concentrate on the highest interest rate debts initially which will save you money in the future. Interest on loans are a formidable force and can cripple your finances if you don’t take care. You also might want to list your income streams too so you can figure out how much will be left over for living expenses. This will assist you in our next tip, creating a budget.
To make sure that you can still enjoy the year in advance, you’ll really want to clear your Christmas debt inside the first quarter of the year, so developing a budget and sticking to it is imperative. If you’ve had issues adhering to a budget previously, there are loads of great smartphone apps that can help you with maintaining your budget. Just because you’re on a budget doesn’t suggest you can’t have any fun either. There are an abundance of free and affordable activities available, you just have to change your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Even though it may sound apparent, the easiest way to pay off debt is to increase your savings and stay clear of unnecessary expenses. You might like to stop eating out once a week which can save you a surprising amount of money. Or you could catch public transport to work to save money on gas. If you feel inclined, cut up your credit cards! Do whatever you have to do to save money – being frugal is 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!
Track your progress
Review your progress monthly to see how well your plan is performing. You might prefer to make some changes if required, and you’ll have a better idea of what changes are rational based upon the previous month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to celebrate your achievement. A reward doesn’t need to cost an exorbitant amount of money, but it will enhance your motivation to stick to your plan in times of need. By budgeting and tracking your development, 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 reduce your debts in a timely fashion and haven’t prevailed, you may be experiencing financial hardship. Instead of waiting and paying a growing 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 adequately manage your debts, call Bankruptcy Experts Newcastle on 1300 795 575 or visit www.bankruptcyexpertsnewcastle.com.au