For most people, Christmas is seen as the most joyous time of year for both young and old. We all are thrilled to wrap up the year of work or school and enjoy 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 rather easy to lose track of your savings and your waistline! Enjoying a hard-earned holiday is fundamental for our emotional health, so it’s easy to overindulge in presents and holidays during the festive season. But alas, the new year arrives soon enough and we can all start afresh. Time to make some resolutions and plan out the year in advance.
Before we know it, we’re back in the same habits. Work, school, bills, stress. But what if you’re in the situation where you spent way too much throughout the festive season and now you’re in debt? Well, don’t be spooked, it happens to plenty of people during this time of year. The good news is we’ve got some advice on how you can efficiently clear your Christmas debts in a timely fashion.
Create a list of your debts
The first step in clearing your Christmas debts is to work out how much you owe. Take 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. Aim to be conservative here and list every debt you have, irrespective of how big or small. When you’ve discovered your repayment amounts, you’ll have to devise a plan on paying off the principal, which leads us to our next tip.
Keep in mind that debts consist 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 create a plan on paying off the principal. It’s normally 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 debilitate your finances if you don’t take care. You additionally may want 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 you can continue to enjoy the year in advance, you’ll want to clear your Christmas debt within the first quarter of the year, so coming up with a budget and sticking to it is imperative. If you’ve had difficulty following a budget before, 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 imply you can’t have any fun either. There are plenty of free and low-priced activities available, you just need to alter your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Although it may sound apparent, the easiest way to pay off debt is to increase your savings and steer clear of unnecessary expenses. You might plan 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 gas. If you feel inclined, cut up your credit cards! Do whatever you have to do to save money – being frugal is crucial. Get in control of your spendings 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 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 based upon 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 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 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 been successful, 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 worsens. 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 properly manage your debts, call Bankruptcy Alice Springs on 1300 818 575 or visit http://www.bankruptcy-alicesprings.com.au/