Holiday debt hangover

Holiday debt hangover? Here is the cure.

By Julie Nipperess

So, despite the best of intentions you went a little overboard? Take two Panadol and read this.

Ok, so you didn’t budget and now your finances are a mess? That’s ok. The good news is that there’s a lesson in here. An important one, but I’ll get to that in a minute.

Right now, I just want you to take a long, hard look at the problem in front of you and I want you to acknowledge that this is a problem that you created – the depleted bank balance, the bloated credit card, the Afterpay or Zip account and all the other bills.

Holiday hangover

First, face your debts head on.

I don’t want you to beat yourself up. It is what it is. And it’s fixable. But it is important that you face it, head on. Grab a calculator and add it all up. Then write that total number down and stick it on your fridge.

Are you wincing? Don’t worry, here on this page lies the answer you’ve been looking for: A step-by-step plan for the next four months to get you back on your feet.

This, my friends, is tough love. It’s not going to be easy, but the spending spree is over for a while. It’s time for a financial detox. But… if you follow these instructions carefully, then by April, you’ll be back on track.

The plan focuses on one area of debt each month, while still leaving you money for all your expenses. Are you ready?

Focus on the immediate debt

January: focus on the immediate debt

First of all, allocate money for rent/mortgage, insurance, electricity, food, petrol and any other necessities. The single focus for January is getting rid of all your IMMEDIATE debt. By this I mean anything that MUST be paid before it starts to attract late fees. With any money that’s left over, pay something forward – get a head start on next month’s bills. Here’s a tip. Try NOT to spend anything more than you have to. No luxuries, and, sorry, but no fun. Unless it’s free.

It’s really not like me to say this, but tough times call for tough measures. Social media might be your best bet for staying in touch with friends and family this month because now is the time to put in place your financial plan, no distractions. And as all the experts in psychology tell us, it takes at least 21 days to wire some new habits in our brains.

Besides, let’s face it, after the holidays you need to make a big effort to get on top of your spending, otherwise you wouldn’t be reading this. You can do it. Stay home, stay focused. If you get bored, have a clean out. Think about anything you no longer want or need that you can potentially sell on Gumtree. Put any cash you earn towards your bills. And don’t join the gym. Not yet. If you want to get fit, or lose a few kilos, dust off your bicycle … or just go for a walk! Or maybe start a dog walking business where you get paid to walk! The extra cash won’t go astray right now.

Focus on expensive debt

February: focus on the expensive debt

As with last month, make sure you’ve allocated money for rent/mortgage, insurance, electricity, food, petrol and any other necessities. After you’ve taken care of these bills, deal with the expensive debt. This will most likely be your credit card. But it could be a rent-to-buy scheme. Expensive debt is anything with really high interest.

This month, your mission, should you choose to accept it, is to really make a dent in this expensive debt.

Instead of just paying the minimum amount, double it. Don’t leave yourself short of cash for necessities (we’re not kicking our heels up just yet), but pay as much as you can.

High-interest debt can spiral if it’s not taken care of, so make February the month that you focus on getting yours well under control. Did I say you should put as much money as you reasonably can towards it? And here’s a tip: Put your cards away. Take them out of your wallet. If you don’t have them with you, you can’t spend more. If you’re going out, take cash.

Start topping up your savings

March: start topping up your savings

As above. Pay the necessary bills, and another big chunk off your expensive debt. Then put $50 a week aside into a savings account, more if you can afford it. Open a separate account if you don’t already have one.

If you’re following this plan, then over the past two months you will have been using all your reserves to tackle your debt. Now it’s time to start to replenish your bank account. And treat yourself to some fun.

Take in a movie, or have an at-home pizza or a pot-luck and wine night. You don’t have to make it a big, expensive deal, but treat yourself. Spend time with people who make you laugh – and relax. Your hard work is paying off.

April: review your progress

April is the month for review. Congratulations, you’ve made it this far! So, add everything up and see how far you’ve come. By now, you should see a big reduction in your debts and a little more cash in your savings. You can keep this plan going if it’s working for you, or, and this is a better idea, consider doing a budget. Remember, not budgeting is what got you into this mess in the first place, so don’t make the same mistake twice, especially seeing as you’re now moving forward. Don’t slip back. You can use our free budgeting worksheet to get started.

Financial hardship help

If you’re really not getting ahead in any meaningful way, then it might be time to consider professional help. A session with a financial planner can be paid out of your superannuation, so it won’t affect your personal cash. You CAN afford it.

Not only will a financial planner/money coach give you specific tailored advice for your situation, but they can help you access the ‘financial hardship’ services offered by banks, financial institutions and many retailers which have schemes to help people in financial trouble by waiving or reducing fees and charges for a short period, or extending payment deadlines if necessary while you get your finances in order.

If you’d like to talk to us, just make an appointment. Remember – no matter how bad it seems right now, there is a solution. And we can help you find it.

Need more information? Get in touch with Step Up Financial

    • 107 Moulder Street,
      Orange, NSW 2800

      PO Box 2499
      Orange, NSW 2800

    • (02) 6362 5445