5 Tips For Repaying Your Christmas Debt
For many people, Christmas is viewed as the most delightful time of year for both young and old. All of us 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 a bit too much is the norm and it’s very easy to lose track of your savings and your waistline! Taking a hard-earned holiday is critical for our psychological health, so it’s easy to overindulge in gifts and getaways 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 plan for the year in advance.
Before we recognise it, we’re back in the same routine. Work, school, bills, stress. But what if you’re in the position where you spent far too much during the festive season and now you’re in debt? Well, don’t be spooked, it happens to lots of people during this time of year. The good news is we’ve got some suggestions on how you can efficiently 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 work out how much you owe. Get hold of a pen and paper and list all of the debts you have, as well as 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 have to devise a plan on paying off the principal, which leads us to our next suggestion.
Keep in mind that debts consist 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 devise a plan on paying off the principal. It’s typically best to concentrate on the highest interest rate debts to begin with which will save you money in the future. Interest on loans are a powerful force and can debilitate your finances if you don’t take care. You likewise may wish to list your income streams simultaneously 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 make sure that you can still enjoy the year ahead, you’ll want to repay your Christmas debt inside the first quarter of the year, so putting together a budget and sticking to it is critical. If you’ve had issues adhering to a budget previously, there are a number of great smartphone apps that can help you with managing 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 inexpensive activities available, you just have to alter your perspective and don’t let your Christmas debt take control of your life.
Save, save, save
Though it may sound apparent, the easiest way to pay off debt is to grow your savings and refrain 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 could catch public transport to work to save money on gas. If you feel inclined, cut up your credit cards! Do whatever you need to do to save money – being prudent is fundamental. 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
Review your progression every month to see how well your plan is performing. You might wish to make some changes if needed, and you’ll have a better idea of what changes are rational depending on the previous month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to commemorate your accomplishment. A reward doesn’t have to cost an enormous amount of money, but it will increase 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 genuinely tried to at least decrease your debts in a timely fashion and haven’t succeeded, 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 depending on your individual circumstances. For a confidential discussion on how to effectively manage your debts, call Bankruptcy Experts Joondalup on 1300 795 575 or visit www.bankruptcyexpertsjoondalup.com.au