Christmas is the season to eat, drink, and be merry. Unfortunately, many families overspend on gifts, food, and drink, and then spend the next twelve months trying to dig a way out of their debt hole. Here are some tips to help you sort out your personal finances in the New Year.
The best way to avoid entering a new year with too much debt is to rein in your spending before Christmas. We all know how easy it is to go crazy and buy the kids new iPads, smartphones, and designer clothing, but honestly – do they really need all these items?
The same applies to food and drink. Most people overspend and buy far more food and drink than they can possibly consume. Be realistic. The shops are only closed for two days, so you don’t need to stockpile cheese, wine, and snacks. Buy only what you need, and if guests drop by unexpectedly, they can make do with turkey leftovers!
Start the New Year in the Right Way
You will inevitably have some debt to resolve in the New Year. Whether it’s a credit card bill or an overdraft, it’s time to start planning your finances. Use a budget calculator to work out how much you can afford to channel into your debt. Since debt is expensive, it’s pointless saving for a rainy day if you have debt hanging over your head. Pay it off first.
Create a home budget and kick off the New Year with a sensible spending plan that allows you to service your debts and then save for the future.
Are you paying a sky-high interest rate on a store card or credit card? If so, look for a cheaper loan to cover the debt. Interest rates are very low right now, so move your debt to an interest-free credit card or cheap personal loan. Once you do this, close your other credit accounts to prevent you succumbing to temptation.
It’s very difficult paying multiple credit cards and personal loans. Juggling the repayments can be tricky and if you miss a payment, it has nasty consequences. The best way to deal with multiple debts is to consolidate them into one payment. The right product will reduce your monthly repayments and help you better manage your budget.
Paying off a relatively modest credit card bill shouldn’t be too painful, but if you wake up on New Year’s Day and realize that you can’t afford to pay the rent because you have so much debt, it’s time to take control.
Don’t ignore your debt. It won’t go away if you refuse to open letters from creditors. Instead, be an adult and admit you have a debt problem. First, call a debt counseling service and ask for an appointment. Trained debt counselors are not there to judge. Their job is to speak to creditors on your behalf and help you work toward a debt-free future.
Don’t let debt strangle you. With the right tools at your disposal, you can look forward to a debt-free year ahead.