For the majority of people, Christmas is considered the most joyous time of year for both young and old. We all are ecstatic to wind up 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 too much is the norm and it’s incredibly easy to lose track of your savings and your waistline! Taking a hard-earned break is important for our mental health, so it’s easy to overindulge in presents and holidays during the festive season. But alas, the new year arrives soon enough and we can all start afresh. Time to make some resolutions and prepare for the year in advance.

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 a bit too much in the course of the festive season and now you’re in debt? Well, don’t be spooked, it happens to plenty of people during this time of year. The good thing is we’ve got some techniques on how you can effectively pay off your Christmas debts in a timely fashion.

Produce a list of your debts

The very first step in paying off your Christmas debts is to figure out how much you owe. Find a pen and paper and list each 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 debt you have, regardless 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.

Make Plan

Keep in mind that debts are composed of both interest repayments and principals. Paying the interest only will doing nothing long-term, so once you’ve worked out your repayment amounts, the next step is to make a plan on paying off the principal. It’s always best to focus on the highest interest rate debts to start with which will save you money in the future. Interest on loans are a powerful force and can stifle your finances if you don’t take care. You additionally may want to list your income streams too so you can determine 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 settle your Christmas debt inside the first quarter of the year, so developing a budget and adhering to it is essential. If you’ve had problems following a budget before, there are lots of great smartphone apps that can assist you with sustaining your budget. Just because you’re on a budget doesn’t indicate you can’t have any fun either. There are lots of free and affordable activities available, you just have to alter your perspective and don’t let your Christmas debt take control of your life.

Save, save, save

Whilst it may sound obvious, the easiest way to pay off debt is to increase your savings and stay away from unnecessary expenses. You might need 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 fuel. If you feel inclined, chop up your credit cards! Do whatever you need to do to save money – being frugal is crucial. 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 progression monthly to discover how well your plan is performing. You might need to make some changes if needed, and you’ll have a better idea of what changes are realistic depending on the past month’s efforts. If you’re being super disciplined and have over-performed, then reward yourself to commemorate your achievement. A reward doesn’t have to cost an outrageous amount of money, but it will raise 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 seriously tried to at least reduce your debts in a timely fashion and haven’t succeeded, 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 becomes worse. 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 Whitsundays on 1300 795 575 or visit www.bankruptcyexpertswhitsundays.com.au