For most people, Christmas is viewed as the most jubilant time of year for both young and old. Most of us are ecstatic to finish the year of work or school and devote some quality time with family and friends. They don’t refer to it as the silly season for nothing either. Eating and spending too much is the norm and it’s incredibly easy to lose track of your savings and your waistline! Enjoying a hard-earned break is essential for our emotional health, so it’s easy to overindulge in presents and vacations 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 realise it, we’re back in the same schedule. Work, school, bills, stress. But what if you’re in the situation where you spent too much during the course of the festive season and now you’re in debt? Well, don’t be unnerved, it happens to numerous people during this time of year. Fortunately we’ve got some suggestions on how you can effectively pay off your Christmas debts in a timely fashion.
Create a list of your debts
The very first step in paying off your Christmas debts is to determine how much you owe. Get hold of a pen and paper and list all of the debts you have, as well as 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 figured out your repayment amounts, you’ll need to devise a plan on paying off the principal, which brings us to our next suggestion.
Remember that debts are composed of both interest repayments and principals. Paying the interest only will doing nothing long-term, so when you’ve determined 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 to start with which will save you money down the road. Interest on loans are a formidable force and can debilitate your finances if you don’t take care. You also may wish to list your income streams as well so you can figure out 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 clear your Christmas debt within the first quarter of the year, so developing a budget and sticking to it is essential. If you’ve had difficulty sticking to a budget previously, there are lots of great smartphone apps that can support you with maintaining your budget. Just because you’re on a budget doesn’t imply you can’t have any fun either. There are lots 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
Even though it may sound evident, the simplest way to pay off debt is to increase your savings and stay away from unnecessary expenses. You might choose 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 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 continue until the following Christmas!
Track your progress
Assess your progression monthly to see how well your plan is performing. You might wish to make some changes if required, and you’ll have a better idea of what changes are practical based on the previous 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 exorbitant amount of money, but it will raise your motivation to stick to your plan in times of need. By budgeting and tracking 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 reduce your debts in a timely fashion and haven’t been successful, you may be experiencing financial hardship. Instead of 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 according to your individual circumstances. For a confidential discussion on how to effectively manage your debts, call Bankruptcy Experts Hobart on 1300 795 575 or visit www.bankruptcyexpertshobart.com.au