For many people, Christmas is viewed as the most splendid time of year for both young and old. Most of us are excited 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 remarkably easy to lose track of your savings and your waistline! Enjoying a hard-earned break is necessary for our mental health, so it’s easy to overindulge in presents and holidays during the festive season. But alas, the new year comes around soon enough and we can all start anew. Time to make some resolutions and plan for the year in advance.
Before we realise it, we’re back in the same routine. Work, school, bills, stress. But what if you’re in the scenario where you spent excessively during the course of the festive season and now you’re in debt? Well, don’t be startled, it happens to plenty of people during this time of year. The good news is we’ve got some techniques on how you can successfully repay your Christmas debts in a timely fashion.
Create a list of your debts
The first step in paying off your Christmas debts is to find out 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 single debt you have, no matter how big or small. When you’ve worked out your repayment amounts, you’ll have to work out a plan on paying off the principal, which leads us to our next recommendation.
Always remember that debts comprise of both interest repayments and principals. Paying the interest only will doing nothing long-term, so once 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 concentrate on the highest interest rate debts to start 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 similarly may wish to list your income streams also 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 that you can still enjoy the year in advance, you’ll want to settle your Christmas debt within the first quarter of the year, so setting up a budget and sticking to it is crucial. If you’ve had issues sticking to 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 imply you can’t have any fun either. There are lots of free and low-cost activities available, you just have to alter your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Although it may sound apparent, the easiest way to pay off debt is to increase your savings and steer clear of unnecessary expenses. You might need to stop eating out 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 penny-wise is important. Get in control of your expenditures and save as much as possible; you don’t want your holiday debt hangover to continue until the following Christmas!
Track your progress
Evaluate your progression every month to see 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 rational based upon the previous month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to celebrate your success. A reward doesn’t have to cost an enormous amount of money, but it will increase your motivation to stick to your plan in times of need. By budgeting and tracking your development, 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 succeeded, you may be experiencing financial hardship. Rather than waiting and paying more and more 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 according to your individual circumstances. For a confidential discussion on how to successfully manage your debts, call Bankruptcy Experts Frankston on 1300 795 575 or visit www.bankruptcyexpertsfrankston.com.au