For many people, Christmas is seen as the most joyous time of year for both young and old. All of us are thrilled to wrap up the year of work or school and devote some quality time with family and friends. They don’t call it the silly season for nothing either. Eating and spending a bit too much is the norm and it’s rather easy to lose track of your savings and your waistline! Taking a hard-earned holiday is vital for our psychological health, so it’s easy to overindulge in gifts and vacations during the festive season. But alas, the new year arrives soon enough and we can all start anew. Time to make some resolutions and prepare for the year ahead.
Before we realise it, we’re back in the same schedule. Work, school, bills, stress. But what if you’re in the situation where you spent too much during 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 news is we’ve got some recommendations on how you can efficiently clear your Christmas debts in a timely fashion.
Create a list of your debts
The very first step in paying off your Christmas debts is to evaluate how much you owe. Find a pen and paper and list all of the debts you have, in addition to the creditor’s, interest rates, next repayment date and repayment amounts. Try to be conservative here and list every debt you have, no matter how big or small. When you’ve worked out your repayment amounts, you’ll need to devise a plan on paying off the principal, which leads us to our next recommendation.
Don’t forget that debts comprise of both interest repayments and principals. Paying the interest only will doing nothing long-term, so once 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 focus on the highest interest rate debts initially which will save you money down the road. Interest on loans are a formidable force and can maim your finances if you don’t take care. You additionally might wish to list your income streams at the same time so you can determine 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 in advance, you’ll want to pay off your Christmas debt within the first quarter of the year, so creating a budget and adhering to it is imperative. If you’ve had difficulty following a budget previously, there are lots of great smartphone apps that can support you with maintaining your budget. Just because you’re on a budget doesn’t mean you can’t have any fun either. There are loads of free and inexpensive activities available, you just need to adjust your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Although it may sound apparent, the simplest way to pay off debt is to increase your savings and steer clear of unnecessary expenses. You might need 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 gas. If you feel inclined, chop up your credit cards! Do whatever you have to do to save money – being frugal is important. Get in control of your expenses and save as much as possible; you don’t want your holiday debt hangover to last until next Christmas!
Monitor your progress
Review your progression monthly to see how well your plan is performing. You might need to make some changes if needed, 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 commemorate your achievement. A reward doesn’t need to cost an exorbitant amount of money, but it will improve your motivation to stick to your plan in times of need. By budgeting and monitoring 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 sincerely tried to at least reduce your debts in a timely fashion and haven’t succeeded, you may be experiencing financial hardship. Instead of waiting and paying more and more 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 depending on your individual circumstances. For a confidential discussion on how to adequately manage your debts, call Bankruptcy Experts Wangaratta on 1300 795 575 or visit www.bankruptcyexpertswangaratta.com.au