For most people, Christmas is considered the most joyful time of year for both young and old. We all are delighted to wrap up the year of work or school and enjoy 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 very easy to lose track of your savings and your waistline! Taking a hard-earned break is crucial for our psychological health, so it’s easy to overindulge in presents and family holidays during the festive season. But alas, the new year arrives soon enough and we can all start a fresh slate. 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 scenario where you spent way too much throughout the festive season and now you’re in debt? Well, don’t be distressed, it happens to plenty of people during this time of year. Thankfully we’ve got some advice on how you can efficiently repay your Christmas debts in a timely fashion.

Make a list of your debts

The first step in clearing your Christmas debts is to find out how much you owe. Take a pen and paper and list all of the debts you have, together 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 figured out your repayment amounts, you’ll have to work out a plan on paying off the principal, which leads us to our next recommendation.

Make Plan

Remember that debts are composed of both interest repayments and principals. Paying the interest only will doing nothing long-term, so once you’ve determined your repayment amounts, the next step is to make a plan on paying off the principal. It’s usually best to focus on the highest interest rate debts to begin with which will save you money in the future. Interest on loans are a formidable force and can debilitate your finances if you don’t take care. You also might wish to list your income streams at the same time 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 you can continue to enjoy the year ahead, you’ll really want to pay off your Christmas debt within the first quarter of the year, so setting up a budget and following it is crucial. If you’ve had difficulty sticking to a budget previously, there are a lot of great smartphone apps that can support you with sustaining 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 inexpensive activities available, you just need to alter your perspective and don’t let your Christmas debt take control of your life.

Save, save, save

Whilst it may sound apparent, the quickest way to pay off debt is to increase your savings and refrain from unnecessary expenses. You might like to stop eating out 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 penny-wise is vital. Get in control of your expenditures and save as much as possible; you don’t want your holiday debt hangover to continue until next Christmas!

Track your progress

Review your progress every month to discover how well your plan is performing. You might intend to make some changes if needed, 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 accomplishment. A reward doesn’t have to cost an exorbitant amount of money, but it will raise your motivation to stick to your plan in times of need. By budgeting and monitoring 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 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 more and more 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 properly manage your debts, call Bankruptcy Experts Townsville on 1300 795 575 or visit www.bankruptcyexpertstownsville.com.au