For many people, Christmas is considered the most jubilant time of year for both young and old. We all are excited 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 a bit too much is the norm and it’s rather easy to lose track of your savings and your waistline! Enjoying a hard-earned break is vital for our mental health, so it’s easy to overindulge in gifts and family holidays during the festive season. But alas, the new year arrives soon enough and we can all start afresh. Time to make some resolutions and plan out the year ahead.
Before we know it, we’re back in the same schedule. Work, school, bills, stress. But what if you’re in the situation where you spent far too much throughout the festive season and now you’re in debt? Well, don’t be distressed, it happens to loads of people during this time of year. Luckily 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 paying off your Christmas debts is to evaluate how much you owe. Get hold of a pen and paper and list all the debts you have, in addition to the creditor’s, interest rates, next repayment date and repayment amounts. Aim to be conservative here and list every single 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 brings us to our next tip.
Don’t forget that debts consist of both interest repayments and principals. Paying the interest only will doing nothing long-term, so once you’ve determined your repayment amounts, the next step is to create a plan on paying off the principal. It’s normally best to concentrate on the highest interest rate debts first which will save you money in the long run. Interest on loans are a powerful force and can maim your finances if you don’t take care. You also might 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 you can still enjoy the year ahead, you’ll need to repay your Christmas debt inside the first quarter of the year, so putting together a budget and adhering to it is critical. If you’ve had issues adhering to a budget in the past, there are loads of great smartphone apps that can help you with sustaining your budget. Just because you’re on a budget doesn’t imply you can’t have any fun either. There are a lot 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
Even though it may sound evident, the quickest way to pay off debt is to increase your savings and avoid unnecessary expenses. You might need 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 fuel. If you feel inclined, cut up your credit cards! Do whatever you have to do to save money – being frugal is fundamental. 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
Review your progression every month to see how well your plan is performing. You might wish to make some changes if needed, and you’ll have a better idea of what changes are rational based upon the past month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to celebrate your achievement. A reward doesn’t have to cost an outrageous 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 reduce your debts in a timely fashion and haven’t been successful, 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 gets worse. 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 appropriately manage your debts, call Bankruptcy Wagga Wagga on 1300 818 575 or visit http://www.bankruptcy-waggawagga.com.au/