For many people, Christmas is seen as the most splendid time of year for both young and old. Most of us are inspired to finalise the year of work or school and spend 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 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 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 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 position 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 plenty of people during this time of year. Thankfully we’ve got some suggestions on how you can proficiently pay off 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. Find a pen and paper and list all of the debts you have, along 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. After you’ve discovered 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 comprise of both interest repayments and principals. Paying the interest only will doing nothing long-term, so after you’ve figured out your repayment amounts, the next step is to make a plan on paying off the principal. It’s usually best to focus on the highest interest rate debts initially which will save you money in the long run. Interest on loans are a formidable force and can cripple your finances if you don’t take care. You additionally might wish to list your income streams simultaneously 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 continue to enjoy the year ahead, you’ll really want to settle your Christmas debt within the first quarter of the year, so creating a budget and adhering to it is vital. If you’ve had issues adhering to a budget in the past, there are a lot of great smartphone apps that can assist 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 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
Though it may sound evident, the simplest way to pay off debt is to increase your savings and refrain from unnecessary expenses. You might need to stop dining 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 prudent is important. Get in control of your expenses and save as much as possible; you don’t want your holiday debt hangover to last until the following Christmas!
Monitor your progress
Evaluate your progress each month to see how well your plan is performing. You might need to make some changes if needed, and you’ll have a better idea of what changes are rational depending on the past month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to celebrate your accomplishment. A reward doesn’t have to cost an extravagant amount of money, but it will enhance your motivation to stick to your plan in times of need. By budgeting and tracking your progression, 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 more and more 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 upon your individual circumstances. For a confidential discussion on how to efficiently manage your debts, call Bankruptcy Experts Tennant Creek on 1300 795 575 or visit www.bankruptcyexpertstennantcreek.com.au