Tips For Paying Off Your Christmas Debt

For many people, Christmas is seen as the most jubilant time of year for both young and old. We all are ecstatic to finish the year of work or school and enjoy 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 remarkably easy to lose track of your savings and your waistline! Enjoying a hard-earned break is important for our psychological health, so it’s easy to overindulge in presents 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 out the year ahead.

 

Before we recognise it, we’re back in the same schedule. Work, school, bills, stress. But what if you’re in the situation where you spent way too much throughout the festive season and now you’re in debt? Well, don’t be alarmed, it happens to loads of people during this time of year. Fortunately we’ve got some ideas on how you can efficiently repay your Christmas debts in a timely fashion.

 

Make a list of your debts

 

The very first step in clearing your Christmas debts is to work out how much you owe. Get hold of a pen and paper and list all the debts you have, in addition to 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. After you’ve discovered your repayment amounts, you’ll need to work out a plan on paying off the principal, which leads us to our next recommendation.

 

Make Plan

 

Bear in mind that debts consist of 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 always best to concentrate on the highest interest rate debts initially which will save you money in the future. Interest on loans are a formidable force and can stifle your finances if you don’t take care. You similarly might want to list your income streams also so you can calculate how much will be left over for living expenses. This will assist you in our next tip, creating a budget.

 

Budget

 

To ensure that you can still enjoy the year ahead, you’ll need to pay off your Christmas debt inside the first quarter of the year, so putting together a budget and following it is vital. If you’ve had difficulty following a budget previously, there are a number of great smartphone apps that can support you with sustaining your budget. Just because you’re on a budget doesn’t imply you can’t have any fun either. There are plenty of free and low-cost activities available, you just need to change your perspective and don’t let your Christmas debt take control of your life.

 

Save, save, save

 

Although it may sound evident, the most basic way to pay off debt is to grow your savings and refrain from unnecessary expenses. You might like to stop eating 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, cut up your credit cards! Do whatever you have to do to save money – being prudent is crucial. Get in control of your spendings and save as much as possible; you don’t want your holiday debt hangover to last until next Christmas!

 

Track your progress

 

Evaluate your progress every month to discover 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 rational depending on the past month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to celebrate your success. A reward doesn’t need 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 tracking 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 honestly tried to at least reduce your debts in a timely fashion and haven’t prevailed, 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 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 adequately manage your debts, call Bankruptcy Experts Melbourne on 1300 795 575 or visit www.bankruptcyexpertsmelbourne.com.au

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