New Year Saving ChallengeJanuary 1, 2024
UK Debt: January 2024 statisticsJanuary 31, 2024
We’re crawling towards the end of January and many of us will be desperately awaiting payday, especially if there was a bit of overspending over Christmas.
If you are feeling the financial strain and you are dealing with Christmas debt, then you may need some tips on how to deal with your Christmas debt.
We can help. Follow these tips to help alleviate some of the anxiety that may be brewing around the debt that you may have accrued over the festive season.
How to deal with your Christmas debt
Assess the damage
Sit yourself down with a cup of tea and conduct a comprehensive financial assessment. Review all bank statements, credit card statements, plus any other financial records to gauge the extent of the overspend.
Understanding the magnitude of the situation is crucial for devising a plan moving forward that you are more likely to stick to.
Once you have discovered the extent of the overspend, you need to prioritise any outstanding debts accrued during the festive season.
Ensure that you have enough money to repay any usual bills, such as rent/mortgage, council tax, utility bills, etc. You have to be in a position to pay these first because there are severe consequences if you do not.
Then move onto prioritising the rest. Consider allocating a portion of your budget specifically towards the debt repayment, if you can. Focusing on the high interest debts first, which can save money in the long run. If you are in a position to do so, look around for deals on balance transfers. This could give you a bit of breathing space – just remember to keep chipping away at that debt and not ignore it.
Create a post-Christmas budget
Design a revised budget that reflects your current financial situation. Once all the necessary expenses have been noted, allocate funds towards debt repayment and establish a realistic monthly budget that allows for both financial recovery, day-to-day living and also saving for this Christmas coming. Treat this Christmas coming as a separate bill so that you ensure you are actually paying money towards it.
Negotiate with creditors
If you find yourself struggling to meet repayment obligations then do not hesitate to reach out to your creditors. We find that many people are scared to approach their creditors due to shame or the fact that they believe they will not receive any help.
Many financial institutions offer hardship programmes or alternative repayment plans. They would rather you call and discuss your situation with them, than you miss repayments and they end up chasing you. Discussing your situation openly with them can result in more flexible terms and potentially reduced interest rates.
Breathing space can be applied for, but only through a debt management agency.
In the aftermath of the festive season which is full of gluttony and more, more, more, why not embrace a more frugal lifestyle? Identify the areas where you can cut back on non-essential spending, such as dining-out, entertainment or subscription services. Carry out a money overhaul to see exactly which areas you can focus on.
Return or exchange unwanted gifts
If you received gifts that you do not want then consider returning or exchanging them. Many retailers extend their return policies during the holiday season, providing an opportunity to recoup some of the funds spent on unnecessary items. If you have missed out on this then you can always try to resell the unwanted gifts on reselling sites.
Plan for future expenses
Consider what birthdays, anniversaries, holidays or other special occasions are coming up in the next few months that you will have financial commitments to. Planning ahead allows you to budget appropriately for future expenses, reducing the likelihood of accumulating additional debt by turning to credit once more.
Explore balance transfer options
As stated above, if you are in a position to do so, explore these options. There are less amazing deals about than there used to be but for those burdened by high-interest credit card debt, these options can be a strategic move. Transferring existing balances to such cards can provide temporary relief and allow you to focus on repayment without accumulating additional interest.
Engage in open communication
We get it. Talking about your finances can be hard. There is a thought that getting yourself into debt can be shameful and irresponsible, but we are here to tell you that is incorrect. There are so many reasons as to why people get into debt and the cost of living crisis has not made finances any easier to handle.
Therefore, if you are in a position of debt, talk to someone about it. If you share financial responsibilities with a partner or family members, then engage in open and honest communication about your financial situation. You can then develop a plan together to address the overspend and work together towards financial recovery.
Learn from the experience
By using these tips and also joining in with our New Year saving challenge you can self reflect and learn from your financial decisions. Identify the triggers that lead to your overspending and develop strategies to avoid this in the future. Building financial resilience involves continuous improvement and a commitment to making informed financial decisions.
Seek professional advice
If the post-Christmas financial strain feels overwhelming, consider seeking advice from financial professionals, like us.
Financial advisers can provide personalised guidance on budgeting, debt management, and long-term financial planning, helping you navigate through challenging times. If you need to talk to someone, then contact us to discuss your situation.
There are other agencies out there who can also provide financial advice. There are various debt management agencies that can be contacted, as well as charities such as Christians Against Poverty, Turn2us, StepChange or visit the Government’s website here.