For many people, Christmas is considered the most splendid time of year for both young and old. We all are inspired to wind up the year of work or school and enjoy 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 rather easy to lose track of your savings and your waistline! Enjoying a hard-earned break is important for our psychological health, so it’s easy to overindulge in presents 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 realise 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 distressed, it happens to numerous people during this time of year. The good news is we’ve got some recommendations on how you can successfully 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 find out how much you owe. Grab a pen and paper and list all the debts you have, together with the creditor’s, interest rates, next repayment date and repayment amounts. Try to be conservative here and list every debt you have, no matter how big or small. Once you’ve determined your repayment amounts, you’ll need to work out a plan on paying off the principal, which brings us to our next suggestion.
Don’t forget that debts consist of both interest repayments and principals. Paying the interest only will doing nothing long-term, so once 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 begin with which will save you money in the long run. Interest on loans are a powerful force and can cripple your finances if you don’t take care. You similarly may wish to list your income streams simultaneously 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 ensure that you can continue to enjoy the year ahead, you’ll want to clear your Christmas debt inside the first quarter of the year, so creating a budget and sticking to it is critical. If you’ve had trouble adhering to a budget in the past, there are a lot of great smartphone apps that can help you with managing your budget. Just because you’re on a budget doesn’t imply you can’t have any fun either. There are loads of free and affordable 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 most basic 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 might catch public transport to work to save money on fuel. If you feel inclined, cut up your credit cards! Do whatever you need to do to save money – being prudent is critical. 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!
Track 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 realistic depending on the past month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to celebrate your accomplishment. A reward doesn’t need 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 monitoring your development, 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 seriously 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 a growing amount of interest, it’s better to seek advice from the experts before your situation gets worse. There are many options available for those in financial hardship and they vary depending on your individual circumstances. For a confidential discussion on how to successfully manage your debts, call Bankruptcy Experts Maitland on 1300 795 575 or visit www.bankruptcyexpertsmaitland.com.au