For the majority of people, Christmas is considered the most joyful time of year for both young and old. We all are excited to finish the year of work or school and spend 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 remarkably easy to lose track of your savings and your waistline! Enjoying a hard-earned holiday 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 comes around soon enough and we can all start anew. Time to make some resolutions and plan for the year ahead.
Before we realise it, we’re back in the same habits. Work, school, bills, stress. But what if you’re in the position where you spent far too much during the course of the festive season and now you’re in debt? Well, don’t be startled, it happens to many people during this time of year. Luckily we’ve got some suggestions on how you can effectively 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 work out how much you owe. Grab a pen and paper and list all of 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 discovered your repayment amounts, you’ll have to work out a plan on paying off the principal, which brings us to our next recommendation.
Bear in mind that debts are composed 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 devise a plan on paying off the principal. It’s generally best to concentrate on the highest interest rate debts to begin with which will save you money down the road. Interest on loans are a formidable force and can cripple your finances if you don’t take care. You similarly may want to list your income streams simultaneously 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 you can still enjoy the year in advance, you’ll need to clear your Christmas debt within the first quarter of the year, so setting up a budget and sticking to it is crucial. If you’ve had difficulty following a budget in the past, there are loads 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 an abundance of free and low-cost activities available, you just have to adjust your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Although it may sound obvious, the easiest way to pay off debt is to increase your savings and refrain from unnecessary expenses. You might like to stop eating out 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 need to do to save money – being prudent is critical. Get in control of your spendings and save as much as possible; you don’t want your holiday debt hangover to continue until next Christmas!
Track your progress
Evaluate your progression every month to discover how well your plan is performing. You might intend to make some changes if required, 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 achievement. A reward doesn’t have to cost an outrageous amount of money, but it will improve your motivation to stick to your plan in times of need. By budgeting and monitoring 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 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 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 depending upon your individual circumstances. For a confidential discussion on how to successfully manage your debts, call Bankruptcy Experts Mildura on 1300 795 575 or visit www.bankruptcyexpertsmildura.com.au