For the majority of people, Christmas is viewed as the most jubilant time of year for both young and old. We all are inspired to wind up the year of work or school and devote 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 really easy to lose track of your savings and your waistline! Enjoying a hard-earned holiday is critical for our emotional health, so it’s easy to overindulge in presents and family holidays 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 situation where you spent too much in the course of the festive season and now you’re in debt? Well, don’t be alarmed, it happens to plenty of people during this time of year. The good news is we’ve got some strategies on how you can successfully clear your Christmas debts in a timely fashion.
Produce a list of your debts
The first step in paying off your Christmas debts is to determine how much you owe. Find 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. Try to be conservative here and list every single debt you have, irrespective of how big or small. After you’ve figured out your repayment amounts, you’ll have to devise a plan on paying off the principal, which brings us to our next suggestion.
Bear in mind that debts consist of both interest repayments and principals. Paying the interest only will doing nothing long-term, so when you’ve discovered your repayment amounts, the next step is to make a plan on paying off the principal. It’s always best to focus on the highest interest rate debts first 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 additionally might wish to list your income streams too 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 you can continue to enjoy the year ahead, you’ll want to settle your Christmas debt within the first quarter of the year, so developing a budget and sticking to it is imperative. If you’ve had trouble adhering to a budget before, there are a number of great smartphone apps that can help you with maintaining 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 low-priced activities available, you just need to alter your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
While it may sound apparent, the most basic way to pay off debt is to grow your savings and refrain from unnecessary expenses. You might choose to stop eating 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 gas. If you feel inclined, cut up your credit cards! Do whatever you need to do to save money – being penny-wise is extremely important. Get in control of your spendings 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 every month to see how well your plan is performing. You might intend to make some changes if required, and you’ll have a better idea of what changes are reasonable depending on the past month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to commemorate your achievement. A reward doesn’t need to cost an exorbitant amount of money, but it will raise your motivation to stick to your plan in times of need. By budgeting and monitoring 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 genuinely tried to at least decrease your debts in a timely fashion and haven’t prevailed, 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 according to your individual circumstances. For a confidential discussion on how to appropriately manage your debts, call Bankruptcy Adelaide on 1300 818 575 or visit http://www.bankruptcy-adelaide.com.au/