For many people, Christmas is viewed as the most joyful time of year for both young and old. Most of us are excited to wrap up the year of work or school and spend 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 very easy to lose track of your savings and your waistline! Enjoying a hard-earned holiday is crucial for our emotional health, so it’s easy to overindulge in presents and vacations during the festive season. But alas, the new year arrives soon enough and we can all start a fresh slate. Time to make some resolutions and plan for the year ahead.
Before we realise it, we’re back in the same habits. Work, school, bills, stress. But what if you’re in the predicament where you spent way too much during the festive season and now you’re in debt? Well, don’t be distressed, it happens to plenty of people during this time of year. Fortunately we’ve got some ideas on how you can successfully repay your Christmas debts in a timely fashion.
Make a list of your debts
The first step in clearing your Christmas debts is to evaluate how much you owe. Grab a pen and paper and list all the debts you have, in conjunction with 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 work out a plan on paying off the principal, which brings us to our next tip.
Keep in mind that debts comprise of both interest repayments and principals. Paying the interest only will doing nothing long-term, so once you’ve figured out your repayment amounts, the next step is to make a plan on paying off the principal. It’s normally best to focus on the highest interest rate debts initially which will save you money down the road. Interest on loans are a powerful force and can cripple your finances if you don’t take care. You also may wish to list your income streams at the same time so you can determine 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 repay your Christmas debt inside the first quarter of the year, so coming up with a budget and sticking to it is obligatory. If you’ve had difficulty adhering to a budget previously, there are a number of great smartphone apps that can assist you with sustaining your budget. Just because you’re on a budget doesn’t mean you can’t have any fun either. There are a number of free and affordable activities available, you just have to adjust your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Even though it may sound apparent, the simplest way to pay off debt is to increase your savings and avoid unnecessary expenses. You might need to stop dining in restaurants once a week which can save you a surprising amount of money. Or you can 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 penny-wise is imperative. Get in control of your expenses and save as much as possible; you don’t want your holiday debt hangover to last until next Christmas!
Track your progress
Review your progression each month to discover how well your plan is performing. You might want to make some changes if required, and you’ll have a better idea of what changes are reasonable based on the previous 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 enormous amount of money, but it will improve 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 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 becomes 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 properly manage your debts, call Bankruptcy Australia on 1300 795 575 or visit www.bankruptcy-australia.net.au