Here’s How To Cure Your Christmas Debt Hangover

Stressed women holding a plastic credit card while looking at paper documents

14 Jan Here’s How To Cure Your Christmas Debt Hangover

The holidays may be a distant memory but unfortunately the Christmas debt hangover still lingers on. If you’re like many people, you probably managed to rack up a sizeable debt over the holidays. The cost of entertainment, meals and drinks, gifts and travel can quickly add up leaving you feeling overwhelmed by how much you have to repay.

Financial stress negatively impacts both your physical health and mental wellbeing, while poorly managed credit card debt can affect your credit rating and end up costing you in extra fees and interest charges. If you’ve overspent at Christmas, there are some steps you can take right now to get on top of your holiday debt and cure your Christmas debt hangover.

1. Assess the damage

The first step to crunching your debt is knowing how much you’re in for. It’s easy to lose track of how much you’ve spent if you’ve been using your credit card or you have more than one credit card. So start by listing every debt you have, including your regular long-term loans like a car loan and mortgage. Next, take a look at each of your latest statements to get an accurate calculation of how much you owe, how long it will take you to repay your debt paying just the minimum balance, and how much interest you’ll be charged over the life of your debt.

2. Stop your spending

Now that you have a clearer idea of your total debt, you can plan how you’re going to repay it. Your aim here is to increase your repayments rather than simply paying the minimum due. But first you need to stop spending. Put away your credit cards or hand them over to a family member for safe keeping so you’re not tempted to keep spending. Swap your credit card for a debit card so you can only spend what you have in your savings account.

Keep track of any spending you do in a budget tracker or spreadsheet to help you stay on track and avoid overspending. Scrutinise your last six months of credit card statements and look for ways to cut out discretionary spending – like meals out, shopping sprees or memberships you can cancel for a short time at least.

3. Make a plan

To pay down your debt you could consider shifting all of your spare cash into the credit card with the highest interest rate to pay it off first. Once you’ve cleared your debt on that credit card, cancel it so you’re not tempted to rack up any debt again. Alternatively, paying off the smallest credit card first could be the motivation and sense of accomplishment you need to continue clearing your debt, so you may want to focus on paying off the smallest debt, and then the next smallest and so on.

Consolidating your debt into one manageable loan at a much lower interest rate could be a solution. Debt consolidation loans from Max Loans could help you take back control of your financial future with just one regular loan repayment that has a fixed end date so you know when you will be debt-free. If you own a car, the equity in your car could be used to leverage a secured personal loan to reduce or pay off high interest rate debts like credit cards.

4. Start saving

It’s never too early to start saving for next Christmas. Get a jumpstart by asking yourself these questions:

  • Where did you overspend this Christmas?
  • Where can you cut back next Christmas?

Then calculate your budget for next Christmas and divide it by the number of months left in the year – this will be your monthly savings goal. A little planning and some early saving means your next Christmas will be fully funded and you can avoid a Christmas debt hangover next year.

Take back control

If you’re facing a mountain of debt that isn’t getting any smaller no matter how hard you try, it’s time to get support. Consolidating your debt could be the answer. Debt consolidation loans wrap all of your existing debt into one loan repayment, saving you money and simplifying repayments. With fixed repayments, you’re able to budget realistically and pay off your debt faster.

Talk to our team about your options for NZ Finance to help get you back on track.

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This publication should not be deemed as financial advice. While all care has been taken in the preparation of this publication by the writer, Max Loans and the writer give no warranty as to the accuracy of this publication and whether the information contained within it is appropriate for your individual circumstances. No responsibility is taken by Max Loans or the writer for any errors or omissions in this publication. You should seek specific financial advice appropriate to your individual circumstances before acquiring or disposing a financial product.