For most people, Christmas is seen as the most splendid time of year for both young and old. We all are inspired 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 a bit too much is the norm and it’s very easy to lose track of your savings and your waistline! Taking a hard-earned holiday is fundamental for our emotional 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 afresh. Time to make some resolutions and plan for the year in advance.
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 a bit too much in the course of the festive season and now you’re in debt? Well, don’t be spooked, it happens to many people during this time of year. The good thing is we’ve got some recommendations on how you can successfully repay your Christmas debts in a timely fashion.
Produce a list of your debts
The very first step in clearing your Christmas debts is to find out how much you owe. Get hold of a pen and paper and list each 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, no matter how big or small. When you’ve determined your repayment amounts, you’ll have to work out a plan on paying off the principal, which brings us to our next recommendation.
Always remember that debts comprise of both interest repayments and principals. Paying the interest only will doing nothing long-term, so once you’ve determined your repayment amounts, the next step is to make a plan on paying off the principal. It’s normally best to concentrate on the highest interest rate debts to begin with which will save you money over time. Interest on loans are a powerful force and can maim 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 ensure that you can continue to enjoy the year ahead, you’ll need to settle your Christmas debt within the first quarter of the year, so establishing a budget and sticking to it is imperative. If you’ve had issues following a budget in the past, there are plenty of great smartphone apps that can help you with maintaining your budget. Just because you’re on a budget doesn’t mean you can’t have any fun either. There are plenty of free and low-cost activities available, you just have to change your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Whilst it may sound obvious, the quickest way to pay off debt is to increase your savings and steer clear of unnecessary expenses. You might want to stop eating out once a week which can save you a surprising amount of money. Or you might catch public transport to work to save money on fuel. If you feel inclined, cut up your credit cards! Do whatever you need to do to save money – being penny-wise is important. Get in control of your expenditures and save as much as possible; you don’t want your holiday debt hangover to last until the following Christmas!
Track your progress
Evaluate your progression each month to see how well your plan is performing. You might prefer to make some changes if needed, and you’ll have a better idea of what changes are practical based on the previous month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to commemorate your accomplishment. 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 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 really 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 a growing 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 according to your individual circumstances. For a confidential discussion on how to effectively manage your debts, call Bankruptcy Experts Sunshine Coast on 1300 795 575 or visit www.bankruptcyexpertssunshinecoast.com.au