For the majority of people, Christmas is seen as the most jubilant time of year for both young and old. All of us 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 remarkably easy to lose track of your savings and your waistline! Enjoying a hard-earned break is essential for our emotional health, so it’s easy to overindulge in presents and family 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 plan for the year in advance.
Before we realise it, we’re back in the same routine. Work, school, bills, stress. But what if you’re in the predicament where you spent way too much during the festive season and now you’re in debt? Well, don’t be spooked, it happens to lots of people during this time of year. The good news is we’ve got some tips on how you can efficiently pay off your Christmas debts in a timely fashion.
Make a list of your debts
The first step in repaying your Christmas debts is to work out how much you owe. Find a pen and paper and list all of the debts you have, in addition to the creditor’s, interest rates, next repayment date and repayment amounts. Try to be conservative here and list every single debt you have, irrespective of how big or small. After you’ve figured out your repayment amounts, you’ll need to devise a plan on paying off the principal, which brings us to our next recommendation.
Bear in mind that debts comprise of both interest repayments and principals. Paying the interest only will doing nothing long-term, so after you’ve worked out your repayment amounts, the next step is to make a plan on paying off the principal. It’s always best to concentrate on the highest interest rate debts initially 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 similarly might wish 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 ensure you can continue to enjoy the year ahead, you’ll really want to pay off your Christmas debt within the first quarter of the year, so creating a budget and sticking to it is essential. If you’ve had trouble adhering to a budget previously, there are a number of great smartphone apps that can help you with maintaining your budget. Just because you’re on a budget doesn’t imply you can’t have any fun either. There are an abundance of free and low-cost activities available, you just need to change your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
While it may sound obvious, the easiest way to pay off debt is to increase your savings and stay away from unnecessary expenses. You might choose 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 fuel. If you feel inclined, chop up your credit cards! Do whatever you need to do to save money – being prudent is essential. Get in control of your expenses and save as much as possible; you don’t want your holiday debt hangover to continue until next Christmas!
Monitor your progress
Evaluate your progress each month to discover how well your plan is performing. You might want to make some changes if needed, and you’ll have a better idea of what changes are reasonable based upon the past month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to commemorate your achievement. A reward doesn’t need to cost an exorbitant 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 reduce your debts in a timely fashion and haven’t been successful, you may be experiencing financial hardship. Instead of 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 adequately manage your debts, call Bankruptcy Experts Gympie on 1300 795 575 or visit www.bankruptcyexpertsgympie.com.au