The holidays are a time for celebrating and sharing. However, they are also a time of spending more than planned.
Even when you set a gift budget, costs relating to travel, gas, and food can quickly increase the bill. As a result, many people notice their debt has increased after the holidays. If you are concerned about your holiday spending, here are some tips to help you put an end to indebtedness.
How to repay your holiday debt quickly
Calculate the amount due
Before beginning repayment, it is wise to know your total accumulated debt. Your first step should be to list all your bills and calculate the total.
Take all the amounts representing debt into consideration. These may include credit cards, lines of credit, a loan borrowed from a close relative, debts accumulated before the holidays, and more.
By preparing a complete picture of your financial situation, you will have a wider view of your indebtedness and a better idea of the effort required to repay all your debts.
Plan your budget to repay your debts
To repay your holiday debts, we also recommend listing your recurring expenses and deposits. This exercise will help you determine how much of your income can be earmarked for debt repayment.
If you realize that your income is lower than your expenses, you must try to reduce your consumption. Or contact one of our Licensed Insolvency Trustees for help. We can recommend solutions that are adapted to your financial situation to resolve your debt predicament.
If you want to plan a budget, try our free online tool. This tool will help you save time and calculate the amount to dedicate to repaying your debt and paying your current expenses.
Prioritize your holiday debt repayment
Once you have a better idea of the amounts owed, we recommend selecting a repayment strategy that works for your financial situation.
One option is to prioritize your debts based on interest rates. In this plan, you repay bills with the highest interest rate first. This reduces costs related to credit usage.
Alternatively, you might prefer to repay the smaller bills first. This option rapidly eliminates some debts from your list.
This strategy has the advantage of being motivating, because seeing a decreasing list gives the encouraging impression of progress towards the ultimate goal of complete debt repayment.
Keep in mind that, in the end, you will have paid more interest compared to the first strategy, which prioritizes debt repayment based on interest charges.
Make a detailed plan to repay your holiday debts
Create an action plan based on your budget and the amount you have to repay. Start by determining a repayment period, for example, 15 weeks. Divide the total amount due by the number of weeks. This way, you’ll have a general idea of the weekly payment to make for your debt. If the resulting amount doesn’t work with your budget, increase the number of weeks and start again until you have a weekly payment that corresponds to the amount you’re able to pay. The goal is to make a viable plan that will enable you to wipe out your debts in a set amount of time.
Meanwhile, try to limit your expenses and save whenever possible. For example, this would be an excellent time to use the rewards program offered by your credit card company. Use your points to pay for groceries or other essentials to reduce pressure on your budget.
Start repaying your debts
Once you have established a plan, start repaying your debts following the method you have chosen. Respect your weekly budget and pay your calculated amount each week. During this time, continue making minimum payments to maintain a good credit score.
Learn from your mistakes: avoid holiday debts
To prevent this scenario from occurring every year, you should implement reminder strategies for next year’s holiday season.
For example, you can save bills related to the last holiday period. Use them to plan your expenses for the upcoming year or to reassess the importance of the purchases you made.
You can also keep bills in your wallet as a daily reminder of how easy it can be to acquire debt.
Start now to put an end to your debt
Many solutions and strategies exist to pay holiday debts. If you have large debts and are in a difficult financial situation, a Licensed Insolvency Trustee can help you.
With their help, you can plan a strategy to eliminate your debts, adapted for your situation.
Above all, remember that at Ginsberg Gingras, assessments are always free we do not judge and discretion is assured.