5 Tips For Repaying Your Christmas Debt
For many people, Christmas is considered the most joyous time of year for both young and old. We all are excited 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 a bit too much is the norm and it’s really easy to lose track of your savings and your waistline! Enjoying a hard-earned break is necessary for our emotional health, so it’s easy to overindulge in presents and vacations during the festive season. But alas, the new year arrives soon enough and we can all start anew. Time to make some resolutions and plan out the year in advance.
Before we realise it, we’re back in the same routine. Work, school, bills, stress. But what if you’re in the predicament where you spent excessively during the festive season and now you’re in debt? Well, don’t be alarmed, it happens to lots of people during this time of year. The good news is we’ve got some strategies on how you can proficiently repay your Christmas debts in a timely fashion.
Produce a list of your debts
The very first step in repaying your Christmas debts is to understand how much you owe. Take a pen and paper and list each 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 single debt you have, regardless of how big or small. After you’ve worked out your repayment amounts, you’ll need to devise a plan on paying off the principal, which leads us to our next suggestion.
Bear in mind that debts comprise of both interest repayments and principals. Paying the interest only will doing nothing long-term, so once you’ve worked out your repayment amounts, the next step is to make a plan on paying off the principal. It’s usually best to concentrate on the highest interest rate debts first which will save you money in the future. Interest on loans are a formidable force and can cripple your finances if you don’t take care. You also may wish to list your income streams at the same time 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 that you can still enjoy the year ahead, you’ll want to pay off your Christmas debt inside the first quarter of the year, so creating a budget and sticking to it is imperative. If you’ve had issues sticking to a budget in the past, there are a lot of great smartphone apps that can assist you with sustaining your budget. Just because you’re on a budget doesn’t mean you can’t have any fun either. There are an abundance of free and affordable activities available, you just need to change your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Though it may sound evident, the simplest way to pay off debt is to increase your savings and refrain from unnecessary expenses. You might need 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 need to do to save money – being penny-wise is very important. Get in control of your expenditures and save as much as possible; you don’t want your holiday debt hangover to last until the following Christmas!
Monitor your progress
Review your progression each month to see how well your plan is performing. You might prefer to make some changes if needed, and you’ll have a better idea of what changes are practical 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 enhance your motivation to stick to your plan in times of need. By budgeting and tracking your development, 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. Rather than 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 successfully manage your debts, call Bankruptcy Experts Wollongong on 1300 795 575 or visit www.bankruptcyexpertswollongong.com.au