In our line of business, we typically see a wave of people overwhelmed by holiday spending and hoping to make a fresh start in the New Year. Many people tend to go over the edge over the holidays.
The bills come in at the end of January and they spent more than they thought. The danger comes from what’s not wrapped – the entertaining, traveling, or even tempting holiday sales and festivities.
If not careful, these unplanned expenses can derail even the most mindful budgeters and lead to tighter finances, stress and even regret when the bills come due.
So, what to do if you start 2017 buried in bills?
Seeking help from a reputable financial advisor a great first step.
Credit counseling is the process of reviewing finances, addressing debt problems, and learning how to manage a budget and rebuild credit.
It’s confidential and non-judgemental. People can walk away feeling relieved, but not embarrassed. Sometimes people want to come see us but they don’t feel comfortable, they feel like they’ve really blown it. But, we have seen it all.
With debt loads continuing to climb, it’s encouraging that repaying debt remains a top priority for Australians. However, with some Australians say they are taking on debt just to cover day-to-day expenses and too few actually seeking advice on how to build a repayment plan, it’s clear there is a gap when it comes to taking action on debt management and reduction.
Simple tips for people who have a New Year’s resolution to be debt free include:
- Creating a list of all your debt and the corresponding interest rates
- Making a monthly budget and keeping a spending diary for a month to get a clear picture of money going in and out
- Bringing in extra cash by selling off assets, getting a part time job or renting our part of your home
- Cutting down expenses by being clear about needs vs. wants. Look at cutting back on areas such as take-out food and coffee, entertainment, clothing and cell phone bill extras
- Saving now for next Christmas. Start putting $10 a week aside and you’ll have close to $500 to spend on gifts next year, credit card free
- Telling family and friends about your goals so they can support you
If you’re not sure whether you have a debt problem, ICG Financial Planners Melbourne offers some red flags to watch for.
They include paying only the monthly minimum on loans, borrowing from friends and family to make ends meet, using a cash advance from one creditor to pay another and requesting an increase on spending limits.