For many people, Christmas is considered the most joyful time of year for both young and old. Most of us are thrilled to wind up 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 pretty easy to lose track of your savings and your waistline! Taking a hard-earned holiday is fundamental for our psychological 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 afresh. Time to make some resolutions and plan for the year ahead.
Before we recognise it, we’re back in the same schedule. Work, school, bills, stress. But what if you’re in the scenario where you spent too much in the course of the festive season and now you’re in debt? Well, don’t be unnerved, it happens to loads of people during this time of year. Fortunately we’ve got some tips on how you can efficiently clear your Christmas debts in a timely fashion.
Make a list of your debts
The very first step in paying off your Christmas debts is to understand how much you owe. Get a pen and paper and list each of the debts you have, coupled with the creditor’s, interest rates, next repayment date and repayment amounts. Aim to be conservative here and list every debt you have, regardless of how big or small. After you’ve discovered your repayment amounts, you’ll need to work out a plan on paying off the principal, which leads us to our next recommendation.
Always remember that debts are composed of both interest repayments and principals. Paying the interest only will doing nothing long-term, so once you’ve worked 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 first 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 likewise might wish to list your income streams as well so you can work out 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 pay off your Christmas debt inside the first quarter of the year, so coming up with a budget and adhering to it is obligatory. If you’ve had problems adhering to a budget previously, there are plenty of great smartphone apps that can support you with maintaining your budget. Just because you’re on a budget doesn’t mean you can’t have any fun either. There are lots of free and low-cost activities available, you just need to alter your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Though it may sound apparent, the most basic way to pay off debt is to increase your savings and keep away from unnecessary expenses. You might need to stop eating 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, cut up your credit cards! Do whatever you need to do to save money – being penny-wise is essential. 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!
Monitor your progress
Review your progress monthly to discover how well your plan is performing. You might need to make some changes if required, and you’ll have a better idea of what changes are rational 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 have to cost an exorbitant amount of money, but it will increase 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 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 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 adequately manage your debts, call Bankruptcy Brisbane on 1300 818 575 or visit http://www.bankruptcy-brisbane.net.au/