For many people, Christmas is seen as the most joyous time of year for both young and old. All of us are thrilled to wrap 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 rather easy to lose track of your savings and your waistline! Taking a hard-earned break is crucial for our psychological health, so it’s easy to overindulge in gifts 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 prepare for the year ahead.
Before we realise it, we’re back in the same habits. Work, school, bills, stress. But what if you’re in the position where you spent too much during the festive season and now you’re in debt? Well, don’t be distressed, it happens to many people during this time of year. The good thing is we’ve got some techniques on how you can successfully pay off your Christmas debts in a timely fashion.
Create a list of your debts
The very first step in paying off your Christmas debts is to figure out how much you owe. Find a pen and paper and list all of the debts you have, in addition to the creditor’s, interest rates, next repayment date and repayment amounts. Try 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 devise a plan on paying off the principal, which brings us to our next recommendation.
Always remember that debts consist 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 create a plan on paying off the principal. It’s typically best to focus 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 maim your finances if you don’t take care. You likewise might want to list your income streams at the same time 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 that you can continue to enjoy the year in advance, you’ll need to settle your Christmas debt within the first quarter of the year, so putting together a budget and sticking to it is vital. If you’ve had issues sticking to a budget in the past, there are loads of great smartphone apps that can support you with maintaining your budget. Just because you’re on a budget doesn’t suggest you can’t have any fun either. There are plenty of free and low-priced activities available, you just need to adjust your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Although it may sound obvious, the easiest way to pay off debt is to grow your savings and avoid 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 gas. If you feel inclined, cut up your credit cards! Do whatever you have to do to save money – being prudent is extremely important. Get in control of your expenses and save as much as possible; you don’t want your holiday debt hangover to continue until the following Christmas!
Monitor your progress
Evaluate your progress each month to see 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 past month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to commemorate your achievement. A reward doesn’t have to cost an extravagant 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 really 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 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 on your individual circumstances. For a confidential discussion on how to efficiently manage your debts, call Bankruptcy Experts Perth on 1300 795 575 or visit www.bankruptcyexpertsperth.com.au