For many people, Christmas is considered the most pleasant 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 refer to it as 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! Enjoying a hard-earned break is essential for our emotional health, so it’s easy to overindulge in gifts and getaways during the festive season. But alas, the new year arrives soon enough and we can all start a fresh slate. Time to make some resolutions and plan out 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 far too much in the course of 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 recommendations on how you can effectively pay off your Christmas debts in a timely fashion.
Make a list of your debts
The first step in clearing your Christmas debts is to find out how much you owe. Get 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 debt you have, no matter how big or small. After you’ve discovered your repayment amounts, you’ll need to devise a plan on paying off the principal, which leads us to our next recommendation.
Remember that debts includes 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 devise a plan on paying off the principal. It’s normally best to concentrate on the highest interest rate debts to begin with which will save you money over time. Interest on loans are a formidable force and can stifle your finances if you don’t take care. You likewise might wish 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 ensure that you can still enjoy the year in advance, you’ll want to clear your Christmas debt within the first quarter of the year, so establishing a budget and sticking to it is imperative. If you’ve had issues following a budget previously, there are a lot of great smartphone apps that can assist 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 change your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Whilst it may sound evident, the most basic way to pay off debt is to grow your savings and stay clear of unnecessary expenses. You might like 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 important. Get in control of your expenditures and save as much as possible; you don’t want your holiday debt hangover to continue until the following Christmas!
Track your progress
Assess your progress monthly to discover how well your plan is performing. You might want to make some changes if required, 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 celebrate your accomplishment. A reward doesn’t have to cost an outrageous amount of money, but it will raise 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 genuinely tried to at least decrease your debts in a timely fashion and haven’t been successful, you may be experiencing financial hardship. Rather than waiting and paying a growing 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 upon your individual circumstances. For a confidential discussion on how to efficiently manage your debts, call Bankruptcy Experts Toowoomba on 1300 795 575 or visit www.bankruptcyexpertstoowoomba.com.au