For many people, Christmas is considered the most delightful time of year for both young and old. Most of us are excited to wrap up 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 too much is the norm and it’s very easy to lose track of your savings and your waistline! Taking a hard-earned break is necessary for our emotional health, so it’s easy to overindulge in presents and family holidays during the festive season. But alas, the new year comes around soon enough and we can all start afresh. Time to make some resolutions and plan out the year in advance.
Before we recognise it, we’re back in the same habits. Work, school, bills, stress. But what if you’re in the position where you spent too much throughout the festive season and now you’re in debt? Well, don’t be startled, it happens to many people during this time of year. The good news is we’ve got some strategies on how you can proficiently repay your Christmas debts in a timely fashion.
Produce 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 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, 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 tip.
Remember that debts includes both interest repayments and principals. Paying the interest only will doing nothing long-term, so after you’ve discovered your repayment amounts, the next step is to create a plan on paying off the principal. It’s normally best to concentrate on the highest interest rate debts initially which will save you money down the road. Interest on loans are a powerful force and can cripple your finances if you don’t take care. You additionally may want to list your income streams also 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 in advance, you’ll want to clear your Christmas debt inside the first quarter of the year, so setting up a budget and sticking to it is vital. If you’ve had difficulty adhering to a budget before, there are plenty 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 affordable activities available, you just need to alter your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Although it may sound evident, the simplest way to pay off debt is to increase your savings and refrain from unnecessary expenses. You might need to stop dining in restaurants 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 expenditures and save as much as possible; you don’t want your holiday debt hangover to continue until next Christmas!
Monitor your progress
Review your progress each month to discover how well your plan is performing. You might need to make some changes if required, and you’ll have a better idea of what changes are rational 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 need to cost an exorbitant amount of money, but it will raise 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 succeeded, 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 worsens. 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 effectively manage your debts, call Bankruptcy Experts Mackay on 1300 795 575 or visit www.bankruptcyexpertsmackay.com.au