5 Tips For Repaying Your Christmas Debt
For many people, Christmas is seen as the most pleasant time of year for both young and old. Most of us are ecstatic 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 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 gifts and holidays during the festive season. But alas, the new year comes around soon enough and we can all start a fresh slate. Time to make some resolutions and plan for the year ahead.
Before we realise it, we’re back in the same routine. Work, school, bills, stress. But what if you’re in the position where you spent too much throughout the festive season and now you’re in debt? Well, don’t be paniced, it happens to lots of people during this time of year. The good news is we’ve got some tips on how you can successfully repay your Christmas debts in a timely fashion.
Make a list of your debts
The very first step in paying off your Christmas debts is to evaluate how much you owe. Take a pen and paper and list all of the debts you have, along with the creditor’s, interest rates, next repayment date and repayment amounts. Try to be conservative here and list every single debt you have, irrespective of how big or small. When you’ve worked out your repayment amounts, you’ll need to work out a plan on paying off the principal, which brings us to our next suggestion.
Bear in mind that debts includes both interest repayments and principals. Paying the interest only will doing nothing long-term, so after you’ve determined your repayment amounts, the next step is to make a plan on paying off the principal. It’s normally best to concentrate on the highest interest rate debts initially which will save you money in the long run. Interest on loans are a powerful force and can maim your finances if you don’t take care. You similarly may wish to list your income streams too so you can calculate 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 continue to enjoy the year in advance, you’ll need to pay off your Christmas debt inside the first quarter of the year, so creating a budget and following it is vital. If you’ve had problems sticking to a budget before, there are loads 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 loads of free and low-priced activities available, you just have to adjust your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Whilst it may sound apparent, the simplest way to pay off debt is to grow your savings and keep away from unnecessary expenses. You might like 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 gas. If you feel inclined, chop up your credit cards! Do whatever you have to do to save money – being prudent is key. Get in control of your expenses and save as much as possible; you don’t want your holiday debt hangover to last until next Christmas!
Track your progress
Review your progress monthly to discover how well your plan is performing. You might want to make some changes if needed, and you’ll have a better idea of what changes are reasonable depending on the past month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to celebrate your accomplishment. A reward doesn’t need to cost an outrageous 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 honestly 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 worsens. 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 Sydney on 1300 795 575 or visit www.bankruptcyexpertssydney.com.au