Christmas and New Year are over and I realise I have eaten too much, drunk too much and spent too much. You know the feeling. Some thoughts on what to do about it.
Lack of proper budgeting and financial organization during Christmas could lead you to a debt trap that may take years to manage. Some of the causes of Christmas debts include;
<>Taking prolonged credit agreements in order to buy Christmas gifts.
<> Not shopping around while comparing prices to get the best offers.
<> Waiting to buy food items and Christmas gifts during Christmas period instead of having bought some of the items earlier enough.
<> Falling for cheap and unreasonable offers from illegitimate lenders.
<> Maximizing the use of your credit card without considering the interest you will be charged for late payment.
When Christmas debts accumulate, you may struggle to settle your bills come January. However, the following tips may help you to clear your debt.
- Start by clearing the most expensive debts
This implies that more of your monthly repayment will go towards clearing the outstanding balance instead of covering interests. The cost of the debt will therefore be less and you will be free from the debt faster.
- Request for balance transfers
If the interest rates charged on your credit card are very high, this is the best time to switch to a nil interest transfer offer. The 0% interest period will enable you to properly manage your money to clear your debts quickly. By consolidating your accrued credit into a 0% balance transfer offer, it will be possible to make your debts cheaper. You should therefore look for the most competitive balance transfer cards that can give you a longer interest free period at minimum charges.
- Sell unnecessary assets
You could be having some assets that you do not need currently. For instance, may be you have two cars but one is enough hence you can sell the second car. You can also consider whether public transport is convenient. Suppose you have a holiday home, you may also dispose it to clear your debt.
- Request for a holiday in your mortgage payment
If you have a mortgage with a prior agreement for a payment holiday, it is the time to request for the holiday. If the payment holiday is approved, you can use the amount meant for mortgage repayment to pay for your debts.
- Join a credit union
After joining a credit union, you can borrow for a sufficient loan to pay your credit card debts if you are credit worthy. This will give you more time to clear your debt.
- Ask for assistance from friends or relatives
Normally, money obtained from friends and relatives will be interest free and can help you out of your debts. However, it is important to be careful and pay them in case they give you the loan.
Applying the above tips may go a long way in assisting you to clear your debts. I’m going to try to apply to my own finances in 2016.