For many people, Christmas is seen as the most pleasant time of year for both young and old. Most of us are thrilled to finish 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 incredibly easy to lose track of your savings and your waistline! Enjoying a hard-earned holiday is necessary for our psychological health, so it’s easy to overindulge in gifts 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 plan out the year in advance.
Before we realise it, we’re back in the same routine. Work, school, bills, stress. But what if you’re in the situation where you spent too much throughout the festive season and now you’re in debt? Well, don’t be alarmed, it happens to many people during this time of year. The good news is we’ve got some ideas on how you can successfully pay off your Christmas debts in a timely fashion.
Make a list of your debts
The very first step in clearing your Christmas debts is to figure out how much you owe. Grab a pen and paper and list all the debts you have, as well as the creditor’s, interest rates, next repayment date and repayment amounts. Aim to be conservative here and list every debt you have, no matter how big or small. After you’ve discovered your repayment amounts, you’ll have to work out a plan on paying off the principal, which brings us to our next recommendation.
Always remember that debts consist 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 devise a plan on paying off the principal. It’s normally best to focus on the highest interest rate debts to start with 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 similarly might want 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 ensure you can still enjoy the year in advance, you’ll want to pay off your Christmas debt inside the first quarter of the year, so coming up with a budget and adhering to it is critical. If you’ve had problems sticking to a budget previously, there are loads of great smartphone apps that can support you with maintaining your budget. Just because you’re on a budget doesn’t suggest you can’t have any fun either. There are plenty 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
Even though it may sound apparent, the most basic way to pay off debt is to grow your savings and keep away from unnecessary expenses. You might need to stop eating 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 fuel. If you feel inclined, cut up your credit cards! Do whatever you have to do to save money – being prudent is extremely important. 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!
Track your progress
Evaluate your progress each month to see how well your plan is performing. You might intend 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 commemorate your accomplishment. A reward doesn’t have to cost an exorbitant amount of money, but it will increase your motivation to stick to your plan in times of need. By budgeting and monitoring 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 honestly 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 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 efficiently manage your debts, call Bankruptcy Experts Taree on 1300 795 575 or visit www.bankruptcyexpertstaree.com.au