For the majority of people, Christmas is seen as the most jubilant time of year for both young and old. All of us are thrilled to wind up the year of work or school and devote some quality time with family and friends. They don’t refer to it as the silly season for nothing either. Eating and spending a bit 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 essential for our psychological health, so it’s easy to overindulge in gifts and family 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 ahead.
Before we realise it, we’re back in the same routine. Work, school, bills, stress. But what if you’re in the position where you spent too much in the course of the festive season and now you’re in debt? Well, don’t be spooked, it happens to loads of people during this time of year. The good news is we’ve got some ideas on how you can effectively clear your Christmas debts in a timely fashion.
Create a list of your debts
The first step in paying off your Christmas debts is to determine how much you owe. Get hold of a pen and paper and list each of the debts you have, alongside 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 discovered your repayment amounts, you’ll need to devise a plan on paying off the principal, which brings us to our next tip.
Don’t forget that debts includes both interest repayments and principals. Paying the interest only will doing nothing long-term, so when you’ve worked out your repayment amounts, the next step is to make a plan on paying off the principal. It’s typically best to focus on the highest interest rate debts first which will save you money in the long run. Interest on loans are a formidable force and can maim your finances if you don’t take care. You additionally might want 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 in advance, you’ll really want to settle your Christmas debt within the first quarter of the year, so creating a budget and sticking to it is crucial. If you’ve had problems following a budget before, there are a lot of great smartphone apps that can assist you with managing your budget. Just because you’re on a budget doesn’t imply you can’t have any fun either. There are plenty of free and inexpensive activities available, you just need to change your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Whilst it may sound apparent, the easiest way to pay off debt is to grow your savings and avoid unnecessary expenses. You might choose to stop eating in restaurants 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, chop up your credit cards! Do whatever you need to do to save money – being penny-wise is imperative. 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!
Monitor your progress
Assess your progress each month to discover how well your plan is performing. You might prefer to make some changes if required, and you’ll have a better idea of what changes are realistic based on the past month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to celebrate your achievement. A reward doesn’t have to cost an extravagant amount of money, but it will enhance your motivation to stick to your plan in times of need. By budgeting and monitoring 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 honestly 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 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 Gold Coast Bankruptcy Centre on 1300 795 575 or visit www.goldcoastbankruptcycentre.com.au