For the majority of people, Christmas is seen as the most pleasant time of year for both young and old. All of us are delighted 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 too much is the norm and it’s incredibly easy to lose track of your savings and your waistline! Enjoying a hard-earned break is vital for our emotional health, so it’s easy to overindulge in presents and holidays during the festive season. But alas, the new year arrives soon enough and we can all start anew. Time to make some resolutions and plan for the year ahead.
Before we recognise it, we’re back in the same routine. Work, school, bills, stress. But what if you’re in the scenario where you spent far too much during the course of the festive season and now you’re in debt? Well, don’t be distressed, it happens to loads of people during this time of year. Thankfully we’ve got some strategies on how you can proficiently repay your Christmas debts in a timely fashion.
Make a list of your debts
The very first step in repaying your Christmas debts is to discover how much you owe. Get hold of a pen and paper and list all 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, no matter 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 suggestion.
Bear in mind that debts consist of both interest repayments and principals. Paying the interest only will doing nothing long-term, so after you’ve worked out your repayment amounts, the next step is to devise a plan on paying off the principal. It’s generally best to focus on the highest interest rate debts to begin with which will save you money in the future. Interest on loans are a formidable force and can stifle your finances if you don’t take care. You also may wish to list your income streams too 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 make sure that you can continue to enjoy the year ahead, you’ll want to pay off your Christmas debt within the first quarter of the year, so establishing a budget and adhering to it is essential. If you’ve had trouble following a budget before, there are a lot 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 loads of free and low-cost activities available, you just need to alter your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Though it may sound apparent, the easiest way to pay off debt is to grow your savings and stay away from unnecessary expenses. You might want to stop eating 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 penny-wise is crucial. Get in control of your expenditures and save as much as possible; you don’t want your holiday debt hangover to continue until next Christmas!
Track your progress
Review your progression monthly to see how well your plan is performing. You might intend to make some changes if needed, and you’ll have a better idea of what changes are rational depending on the past month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to commemorate your accomplishment. A reward doesn’t have to cost an exorbitant 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 genuinely tried to at least decrease your debts in a timely fashion and haven’t succeeded, you may be experiencing financial hardship. Rather than 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 upon your individual circumstances. For a confidential discussion on how to appropriately manage your debts, call Bankruptcy Experts on 1300 795 575 or visit www.bankruptcyexpertsfremantle.com.au