They say Christmas comes earlier and earlier every year. Well, now the actual day is only around the corner, here at CTACIC we decided right about now is the perfect time to start preparing your post-Christmas money management scheme. It can be all too easy to stick your head in the sand during the festive season and simply spend, spend, spend. However, if you are already in a sticky financial situation (or you think you will when January 1st comes around) ignoring your money is the last thing you should be doing.
Naturally, Christmas will be a little more indulgent in comparison to the other months of the year. But it’s important that you keep a level head in order to avoid a full-blow financial hangover. Thinking proactively about your finances and planning how you are going to meet your repayments come January will prove incredibly beneficial when the time arrives. So, here is our week-by-week guide to help you drag yourself out of post-Christmas debt.
Week One – Making a Start
Getting started is always the hard part, but once you’ve got your bearings about where you stand with your debt you can begin to make productive steps forward. You need to work out exactly how much you owe, who you owe to and when you have to pay it off by. It all sounds relatively simple – however drawing up a budget is likely to be the really difficult part. If you are looking at a figure of more than 20 per cent of your monthly earnings going towards debt repayment, you may have entered a serious level of debt. At this stage, cutbacks and changes need to be made and fast.
Scheduling when you are going to repay your debts is crucial. You need ensure high-priority debts are paid first in order to avoid the loss of your home or essential services. After those are out of the way, focus on the debts with the highest interest rates as these can grow quickly when you aren’t looking.
Week Two – Credit Cards
Your credit card may have been your best friend over the Christmas period, but come January your trusty partner may quickly turn into your worst enemy. Many people rely on their credit cards to see them through the expensive festive season. A lucky few will have found 0 per cent introductory deals, but many will not. For the majority steep interest rates will be slowly increasing your Christmas debt.
A balance transfer card may be an excellent way to get a handle on your credit cards. Often banks offer 0 per cent interest periods on transfer amount of for up to 29 months, in exchange for a transfer fee between 1 and 3 per cent. If your credit card debt really is too much to handle, a consolidating loan may be your best option. From here, you will have to figure out whether your credit card debts would be best paid off either via balance or transfer card.
If you have any store cards or payday loans it is imperative you pay these off and get rid of them immediately. These are both hugely expensive outgoings and your debt will only snowball if left for long periods of time. If you find yourself in what seems like an unmanageable credit card debt situation, you can always seek free debt advice from CTACIC.
Week Three – Outgoing Cutbacks
By week three you should be looking at your outgoings to ensure you are not paying out extra cash for no real reason. Keeping a keen eye on your spending can help you to save money not just in January either, so when better than the New Year to implement a money saving ethic to your finances.
Simple changes to your routine can be made to your routing to make outgoing cutbacks. Making sure your utility bills are being paid by direct debit will cut your bills drastically. Also keeping on top of your energy bills by regularly reporting meter reading to supplier will provide with you a more accurate bill and help you to avoid one-off bill errors. If you feel that you are paying above and beyond what you use, consider switching in order to save money.
Living in your overdraft is a habit best given up in order to adopt a better finance focused attitude. You may be being hit by high interest rates and big bank charges for straying over your pre-agreed overdraft limits. This issue needs to stop as soon as possible, so switching to a current account may gain you a much lower overdraft rate.
Even your insurance policies could be trickling away your cash behind your back. Finding cheaper car cover, contents insurance or mortgage protection could save you huge amounts of cash in total.
Week Four – Mortgage & Rent
If you are the current owner of a mortgage, this is likely to be your biggest expense this month, so ensuring you have the best deal could really come in handy. Cast an eye over your mortgage rate and conditions to find out what rate you are on, whether it is fixed or a tracker rate deal, or your lender’s standard variable rate. You also need double check is there are any early repayment charges you may face. If your mortgage is really weighing you down financially, you may need to consider re-mortgaging.
For those who rent however, one of the most efficient ways to pay down debt would be to move to a cheaper home. If you have the opportunity to move to a cheaper or smaller property, it may be worth taking the hit of living somewhere else in order to pay off your Christmas debts quicker. You should at least set up a direct debt so they you never have to pay a late payment for not paying your rent on time.
If you are unsure about cutting your post-Christmas debts and need professional advice then call us. You can receive free advice from our personable and friendly team, who will guide you towards the best financial solutions.