With hot cross buns already on the shelves, we weren't left much time to recover from Christmas Holidays. As you set your sights on Back to School preparations and finding enough enthusiasm to go to work, the interest on your Christmas spending is slowly creeping up. It won't be long now until you receive your first credit card bill of the year. If you used your credit card for all the extra expenses of Christmas like presents, food, travel and entertainment, then you are in for one big shock.
Christmas is an expensive time of year and unless you start planning for Christmas in January (and honestly, who has time for that?) it's going to hit hard. That's why people turn to their credit cards, but they often don't have a plan in place on how to pay off that debt once Christmas is over. A New Year's Resolution to get out of debt might not be enough for you to tackle this holiday hangover. Here are 5 realistic and achievable things you can do to pay off your credit card after Christmas.
1. Don't Beat Yourself Up
You are not the only person who has to pay off your credit card after Christmas. In fact, according to the Australian Financial Securities Authority, 8870 people declared personal insolvency last financial year due to excessive use of credit. Countless more were able to tighten the reigns just in time and budget their way back to financial health. There is plenty of help available to you to get your money under control and pay off your credit card after Christmas. Try not to dwell on your past spending and focus on a plan to improve things for the future.
2. Call Your Creditors
Your credit cards, power bill, water bill and phone bill are all looming over your head. You don't have enough money to pay them all. Your natural reaction may be to run and hide until it all blows over, but avoiding your bills is the worst thing you could do. Interest will mount, late fees will be applied and an already unmanageable debt will grow into a monster.
Your creditors understand that sometimes, things can get a little difficult. In fact, all your bills will contain a phone number you can call to organise a payment arrangement if you can't pay your bill. A good start to pay off your credit card after Christmas is to find this number and call it. Be honest with your creditors and they'll provide you with an affordable payment plan to manage this bill. This will help you improve cash flow and budget your money correctly to help you pay off your credit card after Christmas.
3. Consolidate Your Credit Cards
If you have only recently started struggling with your finances and you still have a good credit score, this is an option for you. With a few thousand dollars owing on a credit card, the interest will be working against you every step of the way as you try to pay it off. Having a good credit score means you can look around for a new credit card with a 0% introductory period on balance transfers. This means you can transfer the balance of your existing credit card over to your new one and you'll have an interest free period (sometimes up to 24 months) to pay it off.
This immediately eliminates the interest on your debt. Beware when shopping around for this card. Don't apply for several cards at once and go with whoever approves you as excessive enquiries will leave a bad mark on your credit file. When you find a card you think is suitable, call the bank and ask if you can transfer your whole balance, as some of these offers have transfer limits. Once the consolidation is complete, cut up your old cards and throw them away. You are trying to pay off your credit card after Christmas, not get more debt.
4. Slow Down on the Spending
While this is one of the most seemingly obvious steps to take, it is often the most difficult. Life doesn't stop, the kids still need school shoes, you still need to eat and the car still needs petrol. The trick is to prioritise, plan and then pay. The kids need shoes, but they aren't going back to school for a few weeks so hold off until the next sale. You need to eat, so write a meal plan for the week based on specials in the Supermarket Catalogue.
Get big cheap cuts of meat to slow cook and divide into different meals. For example, Brisket can make nachos, spaghetti, pulled beef burgers and a casserole. Fill up the car but then prioritise your travel. Could you walk to your friend's house, ride bikes with the kids to the park? Start thinking about ways you can really stretch your money so you can pay off your credit card after Christmas. Put anything you save towards your debts.
5. Come Up with a Plan to Pay Off Your Credit Card After Christmas
To pay off your credit card after Christmas, you don't need to know every single dollar coming and going. You just need to answer the 3 W's about your debt:
- Who do you owe money to?
- What do you owe?
- When are your payments due?
Once you know the answers you can make a plan to afford your debts when they fall due.
If your debt spirals out of control, there are other measures you can use to get your spending under control. You can try an informal debt negotiation, mortgage refinance, debt consolidation, Part 9 Debt Agreement or even Bankruptcy. Your Summer Holiday Debt Hangover doesn't have to last until Winter. If you pay off your credit card after Christmas, you can get a head-start on Christmas 2018.