For many people, Christmas is considered the most joyful time of year for both young and old. We all are delighted to finish 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 too much is the norm and it’s pretty easy to lose track of your savings and your waistline! Taking a hard-earned break is critical for our mental 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 anew. Time to make some resolutions and prepare for the year ahead.
Before we recognise 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 during the course of the festive season and now you’re in debt? Well, don’t be paniced, it happens to loads of people during this time of year. Thankfully we’ve got some suggestions on how you can proficiently repay your Christmas debts in a timely fashion.
Make 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 debt you have, irrespective of how big or small. When you’ve figured out your repayment amounts, you’ll have to devise a plan on paying off the principal, which brings us to our next suggestion.
Bear in mind that debts are composed of both interest repayments and principals. Paying the interest only will doing nothing long-term, so after you’ve determined your repayment amounts, the next step is to make a plan on paying off the principal. It’s usually best to focus on the highest interest rate debts initially which will save you money in the long run. Interest on loans are a powerful force and can debilitate your finances if you don’t take care. You additionally may wish to list your income streams as well so you can calculate 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 still enjoy the year ahead, you’ll want to pay off your Christmas debt within the first quarter of the year, so establishing a budget and sticking to it is obligatory. If you’ve had issues adhering to a budget previously, there are loads of great smartphone apps that can assist you with managing your budget. Just because you’re on a budget doesn’t mean you can’t have any fun either. There are loads of free and low-priced activities available, you just have to adjust 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 plan 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 gas. If you feel inclined, chop up your credit cards! Do whatever you have to do to save money – being frugal is important. Get in control of your expenses and save as much as possible; you don’t want your holiday debt hangover to last until next Christmas!
Monitor your progress
Assess your progress monthly to discover 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 reasonable based on the previous month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to celebrate your success. A reward doesn’t have 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 tracking 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 sincerely 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 an increasing 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 efficiently manage your debts, call Bankruptcy Experts Port Macquarie on 1300 795 575 or visit www.bankruptcyexpertsportmacquarie.com.au