5 Tips For Repaying Your Christmas Debt
For most people, Christmas is viewed as the most jubilant time of year for both young and old. We all are inspired to finish the year of work or school and spend 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 really easy to lose track of your savings and your waistline! Taking a hard-earned break is critical for our mental 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 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 situation where you spent way too much during the course of the festive season and now you’re in debt? Well, don’t be startled, it happens to many people during this time of year. Fortunately we’ve got some advice on how you can effectively pay off your Christmas debts in a timely fashion.
Create a list of your debts
The first step in repaying your Christmas debts is to understand how much you owe. Grab 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. Aim to be conservative here and list every single debt you have, no matter how big or small. After you’ve worked out your repayment amounts, you’ll have to devise a plan on paying off the principal, which leads us to our next tip.
Bear in mind that debts includes 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 make a plan on paying off the principal. It’s always best to focus on the highest interest rate debts initially which will save you money down the road. Interest on loans are a formidable force and can cripple your finances if you don’t take care. You also might want to list your income streams also 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 really want to pay off your Christmas debt inside the first quarter of the year, so setting up a budget and following it is critical. If you’ve had difficulty following a budget before, there are lots of great smartphone apps that can assist you with managing 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 have to change your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Though it may sound obvious, the quickest way to pay off debt is to grow your savings and keep away from unnecessary expenses. You might plan to stop dining in restaurants once a week which can save you a surprising amount of money. Or you might 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 penny-wise is key. Get in control of your expenses and save as much as possible; you don’t want your holiday debt hangover to continue until next Christmas!
Track your progress
Evaluate your progression every month to discover how well your plan is performing. You might need to make some changes if required, and you’ll have a better idea of what changes are realistic 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 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 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 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 upon your individual circumstances. For a confidential discussion on how to appropriately manage your debts, call Bankruptcy Experts Tamworth on 1300 795 575 or visit www.bankruptcyexpertstamworth.com.au