For most people, Christmas is seen as the most joyful time of year for both young and old. We all are inspired to finalise 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 a bit too much is the norm and it’s very easy to lose track of your savings and your waistline! Taking a hard-earned holiday is fundamental for our psychological health, so it’s easy to overindulge in presents and vacations during the festive season. But alas, the new year arrives soon enough and we can all start afresh. Time to make some resolutions and prepare for the year ahead.
Before we recognise it, we’re back in the same schedule. Work, school, bills, stress. But what if you’re in the situation where you spent excessively during the course of the festive season and now you’re in debt? Well, don’t be startled, it happens to lots of people during this time of year. Luckily we’ve got some tips on how you can effectively repay your Christmas debts in a timely fashion.
Create a list of your debts
The first step in clearing your Christmas debts is to work out how much you owe. Find a pen and paper and list each of the debts you have, along with the creditor’s, interest rates, next repayment date and repayment amounts. Aim to be conservative here and list every single debt you have, no matter 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 suggestion.
Keep in mind that debts comprise of both interest repayments and principals. Paying the interest only will doing nothing long-term, so once you’ve figured out 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 in the future. Interest on loans are a formidable force and can maim your finances if you don’t take care. You additionally may want to list your income streams also so you can work out 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 in advance, you’ll need to pay off your Christmas debt inside the first quarter of the year, so developing a budget and following it is obligatory. If you’ve had trouble sticking to a budget before, there are loads of great smartphone apps that can support you with sustaining 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 affordable 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 simplest way to pay off debt is to grow your savings and keep away from unnecessary expenses. You might like to stop eating in restaurants once a week which can save you a surprising amount of money. Or you could catch public transport to work to save money on gas. If you feel inclined, cut up your credit cards! Do whatever you have to do to save money – being prudent is crucial. 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!
Track your progress
Review your progression every month to see how well your plan is performing. You might want to make some changes if required, and you’ll have a better idea of what changes are realistic based on the previous month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to celebrate your accomplishment. A reward doesn’t have to cost an extravagant amount of money, but it will enhance your motivation to stick to your plan in times of need. By budgeting and tracking your progression, 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 really 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 a growing amount of 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 according to your individual circumstances. For a confidential discussion on how to successfully manage your debts, call Bankruptcy Experts Lismore on 1300 795 575 or visit www.bankruptcyexpertslismore.com.au