For many people, Christmas is seen as the most splendid time of year for both young and old. We all are ecstatic to finish 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 very easy to lose track of your savings and your waistline! Taking a hard-earned break is vital for our mental health, so it’s easy to overindulge in presents and getaways during the festive season. But alas, the new year arrives soon enough and we can all start anew. Time to make some resolutions and prepare for the year in advance.
Before we realise it, we’re back in the same habits. Work, school, bills, stress. But what if you’re in the position where you spent too much in the course of the festive season and now you’re in debt? Well, don’t be paniced, it happens to lots of people during this time of year. Luckily we’ve got some recommendations 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 discover how much you owe. Find a pen and paper and list each of the debts you have, together 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. After you’ve worked out your repayment amounts, you’ll have to devise a plan on paying off the principal, which leads us to our next tip.
Don’t forget that debts includes both interest repayments and principals. Paying the interest only will doing nothing long-term, so after you’ve worked out your repayment amounts, the next step is to create a plan on paying off the principal. It’s typically best to concentrate on the highest interest rate debts to begin with which will save you money in the long run. Interest on loans are a formidable force and can stifle your finances if you don’t take care. You likewise might wish to list your income streams too so you can calculate 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 ahead, you’ll really want to pay off your Christmas debt inside the first quarter of the year, so setting up a budget and following it is obligatory. If you’ve had problems sticking to a budget previously, there are loads of great smartphone apps that can help you with managing 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 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
Although it may sound apparent, the most basic way to pay off debt is to increase your savings and stay clear of 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 fuel. If you feel inclined, chop up your credit cards! Do whatever you need to do to save money – being frugal is vital. Get in control of your expenses and save as much as possible; you don’t want your holiday debt hangover to continue until next Christmas!
Track your progress
Evaluate your progress 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 depending 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 need to cost an extravagant amount of money, but it will increase your motivation to stick to your plan in times of need. By budgeting and tracking 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 sincerely tried to at least reduce your debts in a timely fashion and haven’t succeeded, 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 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 successfully manage your debts, call Bankruptcy Experts Tweed Coast on 1300 795 575 or visit www.bankruptcyexpertstweedcoast.com.au