For the majority of people, Christmas is considered the most joyous time of year for both young and old. We all are delighted to finalise the year of work or school and enjoy some quality time with family and friends. They don’t call it the silly season for nothing either. Eating and spending too much is the norm and it’s remarkably easy to lose track of your savings and your waistline! Taking a hard-earned break is vital for our mental health, so it’s easy to overindulge in gifts and holidays during the festive season. But alas, the new year arrives soon enough and we can all start a fresh slate. Time to make some resolutions and prepare for the year ahead.
Before we recognise it, we’re back in the same habits. Work, school, bills, stress. But what if you’re in the situation where you spent way too much in the course of the festive season and now you’re in debt? Well, don’t be startled, it happens to plenty of people during this time of year. Fortunately we’ve got some strategies on how you can successfully repay your Christmas debts in a timely fashion.
Produce a list of your debts
The first step in clearing your Christmas debts is to evaluate how much you owe. Find a pen and paper and list all of the debts you have, in conjunction with the creditor’s, interest rates, next repayment date and repayment amounts. Try to be conservative here and list every single debt you have, regardless of how big or small. When you’ve discovered your repayment amounts, you’ll have to devise a plan on paying off the principal, which brings us to our next tip.
Don’t forget that debts comprise 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 concentrate on the highest interest rate debts to start with which will save you money in the long run. Interest on loans are a formidable force and can debilitate your finances if you don’t take care. You likewise may want to list your income streams as well 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 continue to enjoy the year ahead, you’ll need to pay off your Christmas debt within the first quarter of the year, so setting up a budget and sticking to it is obligatory. If you’ve had difficulty following a budget before, there are plenty of great smartphone apps that can help you with managing your budget. Just because you’re on a budget doesn’t suggest you can’t have any fun either. There are a lot 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
Though it may sound evident, the quickest way to pay off debt is to increase your savings and keep away from unnecessary expenses. You might like to stop eating in restaurants 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 prudent is vital. Get in control of your expenditures and save as much as possible; you don’t want your holiday debt hangover to continue until the following Christmas!
Monitor your progress
Evaluate your progression monthly to discover 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 based on the previous month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to celebrate your accomplishment. A reward doesn’t need to cost an enormous amount of money, but it will enhance 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 seriously tried to at least decrease your debts in a timely fashion and haven’t been successful, 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 worsens. 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 efficiently manage your debts, call Bankruptcy Coffs Harbour on 1300 818 575 or visit www.bankruptcyexpertscoffsharbour.com.au.