A New Year is supposed to mean a new you. Unfortunately, money woes can take the excitement off toasting the bells. The aftermath of the Christmas season can leave you with financial worries and might even see you falling into debt.
Luckily, if you’re savvy with your money, there are ways that debt can be avoided. But even if you do find yourself in arrears, there are multiple things you can do to help you get back on your feet.
Tackle unnecessary spending
First and foremost, you need to tackle the problem head-on, and that means cutting down on any unnecessary spending.
The period following the festive season is hard for most people. Not only are your finances drained from buying Christmas gifts, and eating and drinking more than usual, there are your usual monthly bills to take care of. Add to that the Boxing Day and January sales, and you’re on the rocky road to the land of debt.
Fortunately, there are small adjustments you can make to stop yourself from slipping into financial dire straits. Firstly, try not to be tempted by the post-Christmas bargains, unless you see something that you really need.
You can also make simple changes in your day-to-day life, and you’ll be surprised at how soon you start to see a difference.
Think about walking or cycling to work rather than using public transport. Don’t worry if your job is too far away – just try getting off a few stops earlier. It might not seem like much, but it’ll all add up over time.
Also, consider taking a packed lunch to work rather than buying food, and you’ll be amazed at how much cash you’re saving.
If you’re in debt, there are two repayment methods you can use to motivate you to get yourself back on track.
In the debt snowball strategy, you begin by paying off your smallest debt first while making only minimum payments on the others. You then move on to the next smallest debt and so on until all your debts are paid in full. People often find this method easier and feel a sense of accomplishment as they pay each debt in turn.
The debt avalanche method is the opposite in that you start by paying off your highest-interest debt first while making the minimum payments on the others. This strategy is more likely to save you money on interest but can be harder to begin with.
Go with whichever method works for you, as the end goal is always the same and that is becoming debt-free.
Save and budget
If you need a hand with managing your finances better, there are lots of budgeting apps you can download for free.
Obviously, it’s recommended that you budget during any time of the year but never is planning your pennies more important than around the festive season.
Do you really need those bargain sprouts that are just going to end up in the bin? Can you go without those flashing tree lights in your driveway?
It’s never too early to start budgeting for next Christmas. In fact, the earlier you start planning your year ahead, the better prepared you’ll be when unexpected life events pop up.
Plan a Christmas budget as early in the year as possible and come December, your future self will thank you.
Manage your cards
Make a New Year’s resolution to pay off your credit card balances in full as you go along – and make sure you stick to it. This technique will make you less likely to buy things on credit that you can’t really afford. Plus, once you fall behind on one payment, your bill for the following month will be higher and before you know it, you’re in debt.
Also, watch out for using your credit card for a cash advance. Interest rates on cash advances are often higher, meaning they will cost you more in the long term.
You might also want to consider either limiting the number of credit cards you own or at least managing them all via a service that allows you to make one simple monthly payment.
Worrying about paying bills and keeping on top of your finances might seem daunting at first, but once you start making small changes, everything should fall into place. Ring in the New Year with a healthy attitude to saving and spending and you won’t look back. Now’s the time to change old habits and make sure you start off 2022 free of money worries and free of debt. Here’s to a new you!