For many people, Christmas is viewed as the most joyful time of year for both young and old. Most of us are delighted to wrap up the year of work or school and spend 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 incredibly easy to lose track of your savings and your waistline! Enjoying a hard-earned break is important for our emotional health, so it’s easy to overindulge in gifts and family holidays 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 ahead.

Before we know it, we’re back in the same routine. Work, school, bills, stress. But what if you’re in the scenario where you spent far too much during the festive season and now you’re in debt? Well, don’t be paniced, it happens to numerous people during this time of year. Thankfully we’ve got some suggestions on how you can effectively repay your Christmas debts in a timely fashion.

Produce a list of your debts

The very first step in clearing 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. Try to be conservative here and list every debt you have, no matter how big or small. Once 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.

Make Plan

Always remember that debts are composed 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 create a plan on paying off the principal. It’s normally best to focus on the highest interest rate debts first which will save you money down the road. Interest on loans are a powerful force and can debilitate your finances if you don’t take care. You likewise might wish to list your income streams simultaneously so you can figure out how much will be left over for living expenses. This will assist you in our next tip, creating a budget.

Budget

To make sure you can continue to enjoy the year ahead, you’ll need to pay off your Christmas debt within the first quarter of the year, so coming up with a budget and sticking to it is essential. If you’ve had trouble adhering to a budget before, there are a number of great smartphone apps that can help you with maintaining your budget. Just because you’re on a budget doesn’t signify you can’t have any fun either. There are a number 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

Even though it may sound obvious, the easiest way to pay off debt is to increase your savings and steer clear of unnecessary expenses. You might plan to stop dining in restaurants once a week which can save you a surprising amount of money. Or you can 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 frugal is critical. Get in control of your expenses and save as much as possible; you don’t want your holiday debt hangover to last until the following Christmas!

Monitor your progress

Evaluate your progression every month to see how well your plan is performing. You might wish to make some changes if required, 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 have to cost an enormous amount of money, but it will improve 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 genuinely 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 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 efficiently manage your debts, call Bankruptcy Experts Rockingham on 1300 795 575 or visit www.bankruptcyexpertsrockingham.com.au