For the majority of people, Christmas is seen as the most delightful time of year for both young and old. Most of us are delighted to wind up the year of work or school and spend some quality time with family and friends. They don’t refer to it as 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 essential for our psychological health, so it’s easy to overindulge in gifts and vacations during the festive season. But alas, the new year arrives soon enough and we can all start afresh. Time to make some resolutions and prepare for the year in advance.
Before we recognise it, we’re back in the same schedule. Work, school, bills, stress. But what if you’re in the position where you spent excessively during the festive season and now you’re in debt? Well, don’t be paniced, it happens to loads of people during this time of year. Luckily we’ve got some suggestions on how you can proficiently 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 find out how much you owe. Get hold of a pen and paper and list all of the debts you have, alongside the creditor’s, interest rates, next repayment date and repayment amounts. Try to be conservative here and list every debt you have, regardless of 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.
Don’t forget that debts are composed of both interest repayments and principals. Paying the interest only will doing nothing long-term, so when you’ve figured out 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 in the long run. Interest on loans are a powerful force and can debilitate your finances if you don’t take care. You likewise might want to list your income streams also so you can determine 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 really want to clear your Christmas debt inside the first quarter of the year, so coming up with a budget and following it is vital. If you’ve had problems sticking to a budget in the past, there are loads of great smartphone apps that can help you with maintaining your budget. Just because you’re on a budget doesn’t imply you can’t have any fun either. There are a number 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
Even though it may sound evident, the easiest way to pay off debt is to grow your savings and refrain from unnecessary expenses. You might plan to stop eating out 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 need to do to save money – being penny-wise is imperative. Get in control of your expenses and save as much as possible; you don’t want your holiday debt hangover to last until the following Christmas!
Track your progress
Review your progression every month to discover how well your plan is performing. You might need to make some changes if required, and you’ll have a better idea of what changes are reasonable based on the past 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 outrageous amount of money, but it will improve your motivation to stick to your plan in times of need. By budgeting and monitoring 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 seriously tried to at least decrease your debts in a timely fashion and haven’t succeeded, 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 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 appropriately manage your debts, call Bankruptcy Experts Hervey Bay on 1300 795 575 or visit www.bankruptcyexpertsherveybay.com.au