For most people, Christmas is seen as the most splendid time of year for both young and old. Most of us are ecstatic to wrap up 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 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 fundamental 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 ahead.
Before we realise it, we’re back in the same routine. Work, school, bills, stress. But what if you’re in the position where you spent a bit too much throughout the festive season and now you’re in debt? Well, don’t be paniced, it happens to numerous people during this time of year. The good thing is we’ve got some advice on how you can effectively repay your Christmas debts in a timely fashion.
Create a list of your debts
The first step in paying off your Christmas debts is to find out how much you owe. Grab a pen and paper and list each 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 single debt you have, no matter how big or small. When you’ve determined your repayment amounts, you’ll have to work out a plan on paying off the principal, which brings us to our next suggestion.
Always remember that debts includes both interest repayments and principals. Paying the interest only will doing nothing long-term, so once 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 first which will save you money in the future. Interest on loans are a powerful force and can debilitate your finances if you don’t take care. You likewise 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 ensure that you can still enjoy the year in advance, you’ll want to clear your Christmas debt within the first quarter of the year, so creating a budget and adhering to it is vital. If you’ve had problems sticking to a budget previously, there are loads of great smartphone apps that can support you with managing your budget. Just because you’re on a budget doesn’t indicate you can’t have any fun either. There are a number of free and low-priced activities available, you just have to change your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
While it may sound evident, the easiest way to pay off debt is to grow your savings and refrain from unnecessary expenses. You might plan 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 prudent 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!
Track your progress
Assess your progression every month to see 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 commemorate your success. A reward doesn’t need to cost an outrageous amount of money, but it will increase 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 really tried to at least decrease your debts in a timely fashion and haven’t succeeded, 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 on your individual circumstances. For a confidential discussion on how to efficiently manage your debts, call Bankruptcy Experts Northern Rivers on 1300 795 575 or visit www.bankruptcyexpertsnorthernrivers.com.au