For many people, Christmas is seen as the most splendid time of year for both young and old. Most of us are inspired to wind up the year of work or school and devote some quality time with family and friends. They don’t refer to it as the silly season for nothing either. Eating and spending a bit too much is the norm and it’s remarkably easy to lose track of your savings and your waistline! Taking a hard-earned break is crucial for our emotional health, so it’s easy to overindulge in presents and family holidays during the festive season. But alas, the new year comes around soon enough and we can all start afresh. Time to make some resolutions and prepare for the year ahead.
Before we know it, we’re back in the same schedule. Work, school, bills, stress. But what if you’re in the position where you spent far too much during the course of the festive season and now you’re in debt? Well, don’t be distressed, it happens to numerous people during this time of year. The good thing is we’ve got some advice on how you can efficiently clear your Christmas debts in a timely fashion.
Produce a list of your debts
The very first step in repaying your Christmas debts is to work out how much you owe. Get hold of a pen and paper and list all of the debts you have, in conjunction with the creditor’s, interest rates, next repayment date and repayment amounts. Try to be conservative here and list every single debt you have, regardless of 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.
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 discovered your repayment amounts, the next step is to create a plan on paying off the principal. It’s always best to concentrate on the highest interest rate debts first which will save you money down the road. Interest on loans are a powerful force and can stifle your finances if you don’t take care. You similarly might want to list your income streams simultaneously so you can work 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 need to clear your Christmas debt within the first quarter of the year, so forming a budget and following it is obligatory. If you’ve had problems following a budget in the past, there are lots of great smartphone apps that can support you with maintaining your budget. Just because you’re on a budget doesn’t mean you can’t have any fun either. There are lots of free and inexpensive activities available, you just need to adjust your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Even though it may sound evident, the simplest way to pay off debt is to increase your savings and stay clear of 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 have to do to save money – being frugal 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 next Christmas!
Monitor your progress
Review your progress every month to discover how well your plan is performing. You might prefer to make some changes if required, and you’ll have a better idea of what changes are realistic depending on the past month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to celebrate your achievement. A reward doesn’t have to cost an exorbitant amount of money, but it will increase 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 reduce 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 gets 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 effectively manage your debts, call Bankruptcy Experts Shepparton on 1300 795 575 or visit www.bankruptcyexpertsshepparton.com.au