For many people, Christmas is considered the most pleasant time of year for both young and old. All of us are excited to finish the year of work or school and enjoy 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 pretty easy to lose track of your savings and your waistline! Taking a hard-earned break is crucial for our emotional 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 plan for the year ahead.
Before we realise it, we’re back in the same schedule. Work, school, bills, stress. But what if you’re in the situation where you spent excessively throughout the festive season and now you’re in debt? Well, don’t be startled, it happens to numerous people during this time of year. Thankfully we’ve got some advice on how you can effectively repay your Christmas debts in a timely fashion.
Produce a list of your debts
The very first step in repaying your Christmas debts is to find out how much you owe. Find a pen and paper and list all of 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 single debt you have, no matter 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 recommendation.
Don’t forget that debts includes both interest repayments and principals. Paying the interest only will doing nothing long-term, so after you’ve worked out your repayment amounts, the next step is to create a plan on paying off the principal. It’s usually best to focus on the highest interest rate debts initially which will save you money in the future. Interest on loans are a formidable force and can stifle your finances if you don’t take care. You likewise might 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 still enjoy the year in advance, you’ll really want to clear your Christmas debt inside the first quarter of the year, so developing a budget and adhering to it is critical. If you’ve had trouble following a budget previously, there are a number of great smartphone apps that can help you with maintaining your budget. Just because you’re on a budget doesn’t indicate you can’t have any fun either. There are a lot of free and low-priced 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 steer clear of unnecessary expenses. You might plan 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 gas. If you feel inclined, chop up your credit cards! Do whatever you need to do to save money – being penny-wise is critical. Get in control of your spendings and save as much as possible; you don’t want your holiday debt hangover to continue until next Christmas!
Track your progress
Assess your progression each month to discover how well your plan is performing. You might need to make some changes if required, and you’ll have a better idea of what changes are practical based 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 have to cost an exorbitant amount of money, but it will raise 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. Rather than 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 depending upon your individual circumstances. For a confidential discussion on how to successfully manage your debts, call Bankruptcy Experts Port Stephens on 1300 795 575 or visit www.bankruptcyexpertsportstephens.com.au