For the majority of people, Christmas is seen as the most pleasant time of year for both young and old. We all are delighted 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 too much is the norm and it’s very easy to lose track of your savings and your waistline! Enjoying a hard-earned break is important for our psychological health, so it’s easy to overindulge in gifts and getaways during the festive season. But alas, the new year arrives soon enough and we can all start a fresh slate. Time to make some resolutions and plan out the year ahead.
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 a bit too much during the course of the festive season and now you’re in debt? Well, don’t be spooked, it happens to lots of people during this time of year. Fortunately we’ve got some tips on how you can proficiently pay off your Christmas debts in a timely fashion.
Create a list of your debts
The first step in paying off your Christmas debts is to work out how much you owe. Take a pen and paper and list each of the debts you have, along with the creditor’s, interest rates, next repayment date and repayment amounts. Aim to be conservative here and list every debt you have, no matter how big or small. When you’ve determined your repayment amounts, you’ll need to work out a plan on paying off the principal, which leads us to our next tip.
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 down the road. Interest on loans are a formidable force and can stifle your finances if you don’t take care. You also might wish to list your income streams too 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 make sure that you can continue to enjoy the year in advance, you’ll need to pay off your Christmas debt inside the first quarter of the year, so developing a budget and sticking to it is imperative. If you’ve had issues following a budget previously, there are plenty of great smartphone apps that can support you with sustaining your budget. Just because you’re on a budget doesn’t signify you can’t have any fun either. There are an abundance of free and inexpensive activities available, you just have to change your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Although it may sound evident, the simplest way to pay off debt is to increase your savings and keep away from unnecessary expenses. You might plan 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 gas. If you feel inclined, cut up your credit cards! Do whatever you need to do to save money – being prudent is vital. 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!
Monitor your progress
Assess your progression each month to discover how well your plan is performing. You might need to make some changes if needed, and you’ll have a better idea of what changes are practical depending on the past month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to celebrate your accomplishment. A reward doesn’t have to cost an exorbitant amount of money, but it will improve 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 seriously 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 becomes worse. 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 Shellharbour on 1300 795 575 or visit www.bankruptcyexpertsshellharbour.com.au