For most people, Christmas is viewed as the most pleasant time of year for both young and old. We all are inspired to finish 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 very easy to lose track of your savings and your waistline! Enjoying a hard-earned break is important for our emotional 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 afresh. Time to make some resolutions and plan for the year ahead.
Before we know it, we’re back in the same habits. Work, school, bills, stress. But what if you’re in the predicament where you spent too much throughout the festive season and now you’re in debt? Well, don’t be paniced, it happens to loads of people during this time of year. The good thing is we’ve got some strategies on how you can efficiently clear your Christmas debts in a timely fashion.
Make a list of your debts
The very first step in repaying your Christmas debts is to find out how much you owe. Get hold of a pen and paper and list all of the debts you have, as well as the creditor’s, interest rates, next repayment date and repayment amounts. Aim to be conservative here and list every single debt you have, irrespective of how big or small. When you’ve discovered your repayment amounts, you’ll need to work out a plan on paying off the principal, which leads us to our next tip.
Don’t forget 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 create a plan on paying off the principal. It’s typically 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 powerful force and can stifle your finances if you don’t take care. You additionally might want to list your income streams also so you can calculate how much will be left over for living expenses. This will assist you in our next tip, creating a budget.
To ensure that you can continue to enjoy the year in advance, you’ll need to settle your Christmas debt inside the first quarter of the year, so creating a budget and following it is crucial. If you’ve had difficulty following a budget before, there are loads of great smartphone apps that can support you with managing your budget. Just because you’re on a budget doesn’t indicate you can’t have any fun either. There are lots of free and affordable activities available, you just need to adjust your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Though it may sound evident, the simplest way to pay off debt is to grow your savings and avoid unnecessary expenses. You might want 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 fuel. If you feel inclined, cut up your credit cards! Do whatever you have to do to save money – being frugal is critical. Get in control of your spendings and save as much as possible; you don’t want your holiday debt hangover to last until the following Christmas!
Monitor your progress
Evaluate your progression each month to discover 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 practical based upon the past month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to celebrate your success. A reward doesn’t need to cost an outrageous amount of money, but it will raise your motivation to stick to your plan in times of need. By budgeting and tracking your progress, 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. Rather than waiting and paying an increasing amount of interest, it’s better to seek advice from the experts before your situation becomes 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 properly manage your debts, call Bankruptcy Experts Rockhampton on 1300 795 575 or visit www.bankruptcyexpertsrockhampton.com.au