For the majority of people, Christmas is considered the most joyous time of year for both young and old. We all are ecstatic to finish the year of work or school and spend 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 pretty easy to lose track of your savings and your waistline! Enjoying a hard-earned holiday is essential for our emotional health, so it’s easy to overindulge in presents and getaways during the festive season. But alas, the new year comes around soon enough and we can all start a fresh slate. Time to make some resolutions and plan out the year in advance.
Before we know it, we’re back in the same schedule. Work, school, bills, stress. But what if you’re in the predicament where you spent way too much during the festive season and now you’re in debt? Well, don’t be spooked, it happens to lots of people during this time of year. The good news is we’ve got some ideas on how you can effectively repay your Christmas debts in a timely fashion.
Create a list of your debts
The very first step in repaying your Christmas debts is to discover how much you owe. Find a pen and paper and list all of the debts you have, in conjunction with the creditor’s, interest rates, next repayment date and repayment amounts. Aim to be conservative here and list every debt you have, irrespective of how big or small. After you’ve worked out your repayment amounts, you’ll have to devise a plan on paying off the principal, which brings us to our next suggestion.
Remember that debts comprise 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 generally best to concentrate on the highest interest rate debts first 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 want to list your income streams as well 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 you can continue to 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 crucial. If you’ve had problems adhering to a budget previously, there are lots of great smartphone apps that can assist you with maintaining 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 inexpensive activities available, you just need to change your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Even though it may sound evident, the easiest way to pay off debt is to increase your savings and stay clear of unnecessary expenses. You might like to stop eating out 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 need to do to save money – being penny-wise is key. Get in control of your spendings and save as much as possible; you don’t want your holiday debt hangover to last until next Christmas!
Monitor your progress
Review your progression monthly 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 rational 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 need to cost an extravagant amount of money, but it will increase your motivation to stick to your plan in times of need. By budgeting and tracking 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 really tried to at least decrease your debts in a timely fashion and haven’t prevailed, 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 becomes worse. 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 appropriately manage your debts, call Bankruptcy Experts Gosford on 1300 795 575 or visit www.bankruptcyexpertsgosford.com.au