For most people, Christmas is considered the most delightful time of year for both young and old. We all are ecstatic 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 rather easy to lose track of your savings and your waistline! Enjoying a hard-earned break is crucial 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 afresh. Time to make some resolutions and prepare for the year ahead.
Before we know it, we’re back in the same schedule. Work, school, bills, stress. But what if you’re in the position where you spent way too much in the course of the festive season and now you’re in debt? Well, don’t be startled, it happens to plenty of people during this time of year. The good thing is we’ve got some advice on how you can successfully clear your Christmas debts in a timely fashion.
Create a list of your debts
The first step in repaying your Christmas debts is to discover how much you owe. Get a pen and paper and list all of the debts you have, alongside the creditor’s, interest rates, next repayment date and repayment amounts. Aim to be conservative here and list every debt you have, regardless of how big or small. When you’ve figured out your repayment amounts, you’ll need to devise a plan on paying off the principal, which leads us to our next tip.
Don’t forget that debts are composed of both interest repayments and principals. Paying the interest only will doing nothing long-term, so when you’ve discovered your repayment amounts, the next step is to create a plan on paying off the principal. It’s usually best to concentrate on the highest interest rate debts to start with which will save you money down the road. Interest on loans are a powerful force and can stifle your finances if you don’t take care. You additionally might want to list your income streams too 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 ensure that you can still enjoy the year ahead, you’ll want to settle your Christmas debt inside the first quarter of the year, so forming a budget and adhering to it is imperative. If you’ve had difficulty following a budget in the past, there are a number of great smartphone apps that can assist you with maintaining your budget. Just because you’re on a budget doesn’t suggest you can’t have any fun either. There are lots of free and low-priced activities available, you just need 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 most basic way to pay off debt is to increase your savings and avoid unnecessary expenses. You might like to stop dining 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 gas. If you feel inclined, chop up your credit cards! Do whatever you have to do to save money – being penny-wise is vital. Get in control of your spendings and save as much as possible; you don’t want your holiday debt hangover to continue until the following Christmas!
Monitor your progress
Evaluate your progress every month to discover how well your plan is performing. You might wish to make some changes if required, and you’ll have a better idea of what changes are rational based upon the previous month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to commemorate your success. A reward doesn’t have to cost an enormous 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 genuinely 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 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 adequately manage your debts, call Bankruptcy Experts Fremantle on 1300 795 575 or visit www.bankruptcyexpertsfremantle.com.au