31 - January

How to Shake the Post-Christmas Debt Hangover

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December is the month where we gorge to excess, leaving ourselves feeling bloated and a little sluggish once the first week of January rolls around. Of course, I’m referring to the surplus of spending that happens rather than the amount of food intake during the festive season. Much like the binge of overeating, an excess of spending at Christmas can leave your debtssuddenly fattened and your collateral levels going through the roof.

Don’t be overwhelmed. Despite the impact there are steps you can take to get things back under control. Here’s our suggested list of the top seven things that can help tighten the budget and bring your credit cards back under control again.

  1. Revisit your budget. The sooner you can get your debt levels down the sooner you can breathe easy. Now is an ideal time to revisit your monthly budget and spending habits and see what money you can commit to debt repayment. If you have current commitments such as Foxtel which you don’t use, or a gym membership you never get around to, that’s money you can put towards the debt repayment pot.
  2. Consider switching your credit card. Banks are forever offering sweet deals to switch credit cards and reduce your interest charges. Free interest periods can buy you the time to get the debt back under control and avoid those expensive interest rates. Be aware however of the impact that cancelling and opening cards may have on your credit score.
  3. Sell up what you don’t need. Everyone has a garage or closet full of stuff that’s never been used or outlived its useful period. These items may not be worth a lot individually but collectively can go a long way to paying off your debts. Now is the time for a stock take. Consider a garage sale, a car boot sale or listing them on Gumtree.
  4. Stop using your card (at least for a while). The first step is to make sure you don’t make things worse. Put your credit card away for a while, at least until you’ve brought the debts back under control. Adding to your debtthrough retail therapy may make you feel better when you do it but only compounds the situation long term.
  5. Prepare to avoid the same problem next year. They say prevention is better than cure. Now is the most effective time to make sure the same problem doesn’t happen next time. Set up a separate bank account where you can deposit a set amount regularly for this years Christmas spend – as little as $20 per week can be enough. Chances are you won’t miss it. When the time comes to fork out for those December bills later this year you will feel a whole lot better paying in cash.
  6. Get rid of the highest interest rate debt first. The debt that will be killing you the most will be the one with the highest interest. Make sure you focus your surplus funds on getting this paid off ahead of the rest.
  7. Bank any December bonuses. If the boss has been generous, or your tax refund from last year has just come through it can be tempting to treat this windfall as a chance for some free spending. Think twice. This could be the boost you need to get that debt paid off and back under control.

The important thing is to take action. Ignoring your increase in debt is no solution and, with high interest rates on credit card debt, will only make your situation worse. Work through the process step by step and you will begin to feel in control of your situation once more.

For financial advice tailored towards your personal situation, please call TGFS Financial Planning today on 1300 755 521 or email trent@tgfsfinancialplanning.com.au

TGFS Financial Planning is an Authorised Representative of Consultum Financial Advisers Pty Ltd.
ABN 65 006 373 995 AFSL No 230323 (Consultum).

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.

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