For most people, Christmas is viewed as the most joyous time of year for both young and old. Most of us are excited to wrap up 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 a bit too much is the norm and it’s really easy to lose track of your savings and your waistline! Taking a hard-earned holiday is crucial for our emotional health, so it’s easy to overindulge in gifts and vacations during the festive season. But alas, the new year arrives soon enough and we can all start afresh. Time to make some resolutions and prepare for 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 predicament where you spent way too much in the course of the festive season and now you’re in debt? Well, don’t be spooked, it happens to loads of people during this time of year. Fortunately we’ve got some strategies on how you can effectively pay off your Christmas debts in a timely fashion.
Make a list of your debts
The very first step in repaying your Christmas debts is to figure out how much you owe. Find a pen and paper and list each of 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, no matter how big or small. When you’ve worked out your repayment amounts, you’ll have to devise a plan on paying off the principal, which leads us to our next tip.
Keep in mind that debts are composed 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 first which will save you money over time. Interest on loans are a powerful force and can debilitate your finances if you don’t take care. You additionally may 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 make sure that you can still enjoy the year ahead, you’ll need to clear your Christmas debt within the first quarter of the year, so forming a budget and adhering to it is essential. If you’ve had difficulty adhering to a budget in the past, 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 imply you can’t have any fun either. There are an abundance of free and low-priced activities available, you just need to adjust your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Although it may sound apparent, the simplest way to pay off debt is to grow your savings and keep away from unnecessary expenses. You might choose to stop eating out once a week which can save you a surprising amount of money. Or you could catch public transport to work to save money on fuel. If you feel inclined, chop up your credit cards! Do whatever you have to do to save money – being frugal is vital. 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!
Monitor your progress
Review your progression each month 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 practical depending on the previous month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to commemorate your success. A reward doesn’t have to cost an enormous amount of money, but it will raise your motivation to stick to your plan in times of need. By budgeting and monitoring 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 sincerely tried to at least reduce your debts in a timely fashion and haven’t succeeded, you may be experiencing financial hardship. Rather than waiting and paying an increasing 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 on your individual circumstances. For a confidential discussion on how to efficiently manage your debts, call Bankruptcy Emerald on 1300 818 575 or visit http://www.bankruptcy-emerald.com.au/