The new year is well and truly underway, but have you said goodbye to that pesky post-Christmas debt or is it still hanging over your head?
According to the Australian Securities and Investments Commission (ASIC), Australians borrowed a whopping $28 billion on credit last December and $9.8 of this was spent on festive gifts.
That’s a huge chunk of debt to pay back after the silly season has come and gone. Combine that with new year expenses such as property rates and school costs and you could be looking at a difficult period financially.
So, as we move further into the year and closer to the next holiday period, how do we clear any debt-hangovers and make 2017 a successful year? Here are a few tips to help.
Pay your debts before the interest free period ends
If you purchased on credit during the holiday season and it was subject to an interest free period, it’s important that you pay this back as soon as possible.
This might seem obvious but it’s an easy trap to fall into. You could be stuck with a seriously high interest rate if you don’t pay off the purchase before this period is over, which could roll-over into debt that stays with you for years!
Make this your priority and have a plan in place to ensure it’s paid off a month or two before the interest free period ends. That way you are prepared if you’re hit with any other unexpected expenses.
If you know you won’t be able to pay it off in time, you might want to think of refinancing so you’re not stuck with high interest charges.
Liberty offer personal loans ranging from $5,000 to $50,000 on a fixed term from one to seven years.
Whilst comparing a credit card and personal loan isn’t the same as comparing apples to apples, personal loans do have several notable benefits.
The most obvious being that you’ll be forced to pay the debt off in a fixed amount of time, so you’ll avoid the temptation of letting the debt linger and paying more interest.
To find out more about Liberty's personal loan options click here.
Hibernate and save this winter
With winter approaching now is a good time to put a savings plan in place to ensure next Christmas you’re prepared for any expenses that come your way.
As the cooler months set in and the couch begins to beckon, it’s likely you’ll spend more time indoors and less money on socialising – but don’t waste these savings.
Once you’ve got your debts under control or paid-off, set up a dedicated account in your online banking for ‘Christmas and New Year expenses’ and put aside a portion of your salary each time you’re paid.
This fund will be your kitty, for any expenses that come up next Christmas, so you know you won’t have to fall back on credit.
Use money management tools to help you track your finances
If you’re not clear on exactly where your money goes you might benefit from downloading one of the many money management apps available.
These tools link to your bank accounts and categorise your spending habits so you have full transparency on where your money goes.
ASIC offer a number of great apps to help you manage your finances such as ‘Money health check’, ‘TrackMyGOALS’ and ‘TrackMySPEND’.
See ASIC’s website for more details.
If you’d like to know more about how Liberty might be able to help, speak to an advisor today.