It can be easy to spend more than you wanted to at holiday times, but there’s plenty you can do to get your finances back on the right track.
Figure out the damage
It may be tempting to ignore your spending, but the sooner you face up to it the sooner you can make it disappear. Is the debt you’ve built up spread across a couple of different credit cards or loans? If it is, add it all up to get an overall picture of just how much you’re in the red.
Set a budget
So now that you’re likely back at work and in the normal routine, why not use a budget planner to figure out the difference between your income and expenses? Once you know what you have left over to play with, consider how much of that you could put towards paying down your debts. To increase this amount, ask yourself if you could tighten any of your spending expenses to help free up more cash.
Prioritise what’s important
Deciding whether to prioritise savings or debts will depend on your unique circumstances. The interest you’re paying on your debts is likely to outpace any interest you’re earning on your savings, so it may be more cost-effective to pay down your debts first.
If you have multiple debts, paying off those that carry the highest interest rate first can help minimise your costs.
Consider your options
If you’re finding multiple debts overwhelming, you might want to consolidate your debts into one with a personal loan or balance transfer on a credit card. Some possible benefits of debt consolidation include:
- Potentially a lower interest rate
- Easier to manage repayments
- Clearer timeline of when your debts will be repaid.
Just keep in mind that by consolidating your debts you’re also taking on a new debt, so it’s important to think through all the pros and cons of all available options to ensure you’re in a better financial position with your new arrangement.
You should have a good idea of whether your budget and plan are working once you begin making repayments. You may find you need to adjust your amounts, but try to make sure you stick to your plan and timeframes. Set yourself goals and targets to reach along the way so you can stay motivated.