For most people, Christmas is considered the most splendid time of year for both young and old. Most of us are delighted to finalise the year of work or school and devote some quality time with family and friends. They don’t call it the silly season for nothing either. Eating and spending too much is the norm and it’s rather easy to lose track of your savings and your waistline! Taking a hard-earned holiday is necessary for our psychological health, so it’s easy to overindulge in gifts and 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 prepare for the year in advance.
Before we recognise it, we’re back in the same routine. Work, school, bills, stress. But what if you’re in the position where you spent way too much during the festive season and now you’re in debt? Well, don’t be unnerved, it happens to lots of people during this time of year. Thankfully we’ve got some suggestions on how you can efficiently clear your Christmas debts in a timely fashion.
Produce a list of your debts
The first step in repaying your Christmas debts is to discover how much you owe. Take a pen and paper and list all the debts you have, in conjunction with the creditor’s, interest rates, next repayment date and repayment amounts. Try to be conservative here and list every debt you have, irrespective of how big or small. When you’ve discovered your repayment amounts, you’ll need to devise a plan on paying off the principal, which brings us to our next suggestion.
Don’t forget that debts are composed of both interest repayments and principals. Paying the interest only will doing nothing long-term, so after you’ve figured out your repayment amounts, the next step is to make a plan on paying off the principal. It’s generally best to focus on the highest interest rate debts to begin with which will save you money in the long run. Interest on loans are a formidable force and can debilitate your finances if you don’t take care. You additionally might want to list your income streams too so you can determine how much will be left over for living expenses. This will assist you in our next tip, creating a budget.
To make sure you can still enjoy the year in advance, you’ll really want to settle your Christmas debt inside the first quarter of the year, so creating a budget and following it is vital. If you’ve had difficulty adhering to a budget before, there are lots of great smartphone apps that can help you with maintaining your budget. Just because you’re on a budget doesn’t mean you can’t have any fun either. There are a number of free and low-priced activities available, you just need to change your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Though it may sound apparent, the quickest way to pay off debt is to grow your savings and stay 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 penny-wise is key. 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!
Monitor your progress
Assess your progression 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 reasonable depending 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 have to cost an extravagant amount of money, but it will improve your motivation to stick to your plan in times of need. By budgeting and monitoring 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 honestly tried to at least decrease your debts in a timely fashion and haven’t prevailed, you may be experiencing financial hardship. Instead of 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 effectively manage your debts, call Bankruptcy Experts Geraldton on 1300 795 575 or visit www.bankruptcyexpertsgeraldton.com.au