5 Tips For Paying Off Your Christmas Debt
For many people, Christmas is considered the most pleasant time of year for both young and old. All of us are ecstatic to finish 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 remarkably easy to lose track of your savings and your waistline! Taking a hard-earned break is essential for our emotional health, so it’s easy to overindulge in gifts and vacations during the festive season. But alas, the new year comes around soon enough and we can all start a fresh slate. Time to make some resolutions and plan out the year in advance.
Before we realise it, we’re back in the same habits. Work, school, bills, stress. But what if you’re in the scenario where you spent way too much throughout the festive season and now you’re in debt? Well, don’t be startled, it happens to lots of people during this time of year. Fortunately we’ve got some techniques on how you can proficiently clear your Christmas debts in a timely fashion.
Create a list of your debts
The very first step in repaying your Christmas debts is to figure out how much you owe. Find a pen and paper and list all 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 debt you have, no matter how big or small. When you’ve figured out your repayment amounts, you’ll need to work out a plan on paying off the principal, which leads us to our next suggestion.
Bear in mind that debts includes 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 create a plan on paying off the principal. It’s always best to concentrate on the highest interest rate debts to begin with which will save you money in the future. Interest on loans are a formidable force and can stifle your finances if you don’t take care. You additionally may 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 make sure that you can continue to enjoy the year ahead, you’ll need to settle your Christmas debt inside the first quarter of the year, so putting together a budget and adhering 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 managing your budget. Just because you’re on a budget doesn’t indicate you can’t have any fun either. There are a number of free and low-cost activities available, you just have to change your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Even though it may sound evident, the most basic way to pay off debt is to grow your savings and keep away from unnecessary expenses. You might like to stop dining in restaurants once a week which can save you a surprising amount of money. Or you could catch public transport to work to save money on fuel. If you feel inclined, chop up your credit cards! Do whatever you have to do to save money – being penny-wise is key. 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
Assess your progression each month to discover how well your plan is performing. You might wish to make some changes if needed, and you’ll have a better idea of what changes are rational based on 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 need to cost an outrageous amount of money, but it will increase your motivation to stick to your plan in times of need. By budgeting and tracking your progress, 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 decrease your debts in a timely fashion and haven’t prevailed, you may be experiencing financial hardship. Instead of waiting and paying an increasing 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 Ipswich on 1300 795 575 or visit www.bankruptcyexpertsipswich.com.au