No matter how carefully you budget, it’s scarily easy to get sucked into spending more than you intended over the festive season.
And it’s not just buying gifts that takes its toll, stocking up on food and enjoying nights out with work colleagues and friends soon adds up. Then comes New Year’s Eve and whether you opt to go out or have friends round, there is more money spent.
If you still have Christmas debts lingering from last year, now is the time to get these cleared once and for all. Here are some handy tips to help you…
Know your limits
You might think you know exactly how much money you have coming in or going out, but setting some time aside to go through your bank statement in fine detail, might produce some surprises. A gym membership that you never use – and don’t intend to! Or perhaps a Direct Debit which you forgot to cancel, there are lots of ways you could find a bit of spare money just by having a good sort out.
It’s also helpful to use your bank statement to draw up a proper budget, so you know exactly what your income and expenditure is. If you pay bills via direct debit, it’s easy for the amount to slowly creep up without realising how much you are paying.
By making a list of everything that comes in and out, you know how much money there is to go around. Use this handy income and expenditure form to help you get started.
Clearing what you owe
When it comes to working out how to clear your debts, it’s a good idea to firstly calculate how much money there is left over, once your essential expenses are taken into account. These are costs such as food, heating, council tax, accommodation and travel.
Then add on any fixed repayments, such as loans and see how much money you have left over. This is the total you have to pay for all your debts, plus any additional expenses which arise.
Once you have all these details, you’ll be able to see if you can free up some cash and increase repayments and clear debts in a shorter amount of time.
Also, if you have debts on your credit cards, make sure you switch the balance to a card with 0% APR / interest rates so that you pay off the debt, rather than additional charges – just make sure you don’t add any other purchases to the card.
More serious problems
Unfortunately, there are cases where there is simply not enough money to pay for basic living essentials and clear debts. This could be due to circumstances beyond control, such as redundancy, pay cuts or simply cutbacks in overtime and bonuses.
If this is the case, it’s vital to get in touch with your lenders sooner rather than later and explain how your circumstances have changed. They may be able to help you set up a repayment plan while you get back on your feet.
If you don’t envisage things improving in the short term, or are just not comfortable dealing with your lenders, there are many professional debt management companies who can act on your behalf. As well as taking on the responsibility of communicating with lenders, they could arrange debt consolidation for you and help you to reduce your monthly outgoings.
To sum up…
Christmas debts have a nasty habit of hanging around much longer than you anticipated. Use 2013 to take some proactive steps to tackle yours and to make sure you aren’t still paying them off when next Christmas rolls around….