For most people, Christmas is considered the most jubilant time of year for both young and old. We all are inspired to finalise 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 remarkably easy to lose track of your savings and your waistline! Taking a hard-earned holiday is necessary for our emotional health, so it’s easy to overindulge in presents and family holidays during the festive season. But alas, the new year comes around soon enough and we can all start afresh. Time to make some resolutions and plan out the year ahead.
Before we recognise it, we’re back in the same routine. Work, school, bills, stress. But what if you’re in the scenario where you spent way too much throughout the festive season and now you’re in debt? Well, don’t be paniced, it happens to many people during this time of year. The good news is we’ve got some techniques on how you can efficiently pay off your Christmas debts in a timely fashion.
Make a list of your debts
The first step in paying off your Christmas debts is to determine how much you owe. Grab a pen and paper and list all 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, regardless of 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 recommendation.
Always remember that debts includes both interest repayments and principals. Paying the interest only will doing nothing long-term, so after you’ve discovered your repayment amounts, the next step is to create a plan on paying off the principal. It’s generally best to focus on the highest interest rate debts to start with which will save you money in the long run. Interest on loans are a powerful force and can debilitate your finances if you don’t take care. You similarly may wish to list your income streams simultaneously 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 make sure you can still enjoy the year in advance, you’ll need to settle your Christmas debt inside the first quarter of the year, so putting together a budget and sticking to it is essential. If you’ve had trouble following a budget in the past, there are a lot of great smartphone apps that can help 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 lot of free and affordable activities available, you just need to change your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Even though it may sound apparent, the quickest way to pay off debt is to grow your savings and keep away from unnecessary expenses. You might like 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 gas. If you feel inclined, cut up your credit cards! Do whatever you need to do to save money – being penny-wise is imperative. Get in control of your expenditures and save as much as possible; you don’t want your holiday debt hangover to last until next Christmas!
Track your progress
Assess your progress each month to discover how well your plan is performing. You might prefer to make some changes if needed, and you’ll have a better idea of what changes are reasonable based upon 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 improve 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 sincerely tried to at least decrease your debts in a timely fashion and haven’t been successful, you may be experiencing financial hardship. Instead of 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 successfully manage your debts, call Bankruptcy Experts Gold Coast on 1300 879 867 or visit www.bankruptcyexpertsgoldcoast.com.au