For most people, Christmas is considered the most delightful time of year for both young and old. We all are excited to finalise 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 really easy to lose track of your savings and your waistline! Enjoying a hard-earned holiday is crucial for our psychological health, so it’s easy to overindulge in presents and vacations 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 ahead.
Before we know it, we’re back in the same routine. Work, school, bills, stress. But what if you’re in the situation where you spent a bit too much throughout 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. Luckily we’ve got some advice on how you can effectively clear your Christmas debts in a timely fashion.
Create a list of your debts
The very first step in clearing your Christmas debts is to understand how much you owe. Grab a pen and paper and list all of the debts you have, together with the creditor’s, interest rates, next repayment date and repayment amounts. Try to be conservative here and list every single debt you have, regardless of how big or small. Once 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 suggestion.
Always remember that debts comprise of 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 devise a plan on paying off the principal. It’s always best to focus on the highest interest rate debts initially which will save you money in the future. Interest on loans are a powerful force and can maim your finances if you don’t take care. You additionally might want 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 make sure you can still enjoy the year ahead, you’ll need to clear your Christmas debt inside the first quarter of the year, so putting together a budget and following it is essential. If you’ve had problems adhering to a budget previously, there are a number of great smartphone apps that can support you with managing your budget. Just because you’re on a budget doesn’t signify you can’t have any fun either. There are a lot of free and low-priced activities available, you just have to alter your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Though it may sound obvious, the quickest way to pay off debt is to grow 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 can catch public transport to work to save money on gas. If you feel inclined, cut up your credit cards! Do whatever you have to do to save money – being penny-wise is crucial. Get in control of your expenditures and save as much as possible; you don’t want your holiday debt hangover to last until the following Christmas!
Monitor your progress
Assess your progression every month to see how well your plan is performing. You might intend to make some changes if needed, and you’ll have a better idea of what changes are realistic based on 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 enormous 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 seriously tried to at least decrease 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 according to your individual circumstances. For a confidential discussion on how to efficiently manage your debts, call Bankruptcy Experts Kalgoorlie on 1300 795 575 or visit www.bankruptcyexpertskalgoorlie.com.au