The most concerning part of Christmas is debt payments. After the occasion, one is often left counting the bills like credit card payments, home renovation loan payments, rent, VAT, etc. If you are someone looking to reduce the debt burden quickly, the blog may help.
Not paying the dues on time leads to late payment penalties, missed payments, and high interest costs. It may become expensive for you to handle. Therefore, one must understand the liabilities and schedule the payments. Don’t waste a moment after Christmas or wait for the New Year. Instead, start counting your dues just after Christmas.
Moreover, don’t delay the dues just because you are habitual of clearing them with new credits. It may become problematic for you. Taking a new loan to pay off an existing one is not a sound solution. Instead, you may get into a debt-trap. Here is how you can streamline payments and skip the debt-trap.
Why does Christmas Occasion feel financially overwhelming?
Christmas means spending more on extras like home decorations, planning gifts, buying apparel, booking tickets to a new destination, etc. These activities are not a usual part of your lifestyle. This is the reason most individuals have low savings during Christmas.
Most UK households spend more during Christmas or December than in any other month of the year. According to the Bank of England, a household spends £700 more than the usual monthly budget in December.
Celebrations hit back with a series of elongated credit card bills, Buy Now, Pay Later schemes, rent, or VAT. The worst part is that disposable income drops significantly during this period. It leaves limited flexibility with the individual to clear the important bills.
Can an online loan help streamline finances after Christmas?
Yes, one may check online loans in Ireland to cover strict deadline payments like credit card or personal loan payments. One can also bridge the money required. It helps you avoid late payment charges and interest costs.
You can generally get the loan the same day to cover unavoidable expenses. However, now you will be liable for a new loan. Therefore, taking or depending on a loan is not the only solution.
Instead, note every expense you make during Christmas and plan its payment. You can counter low disposable income by supplementing your fixed income with a part-time job. It leaves you with more disposable income by the month’s end.
Therefore, cover important bills and expenses without delaying them. Moreover, look for unnecessary aspects you often spend on during the period. Analyse whether you can cut or spend less on these. It will help you save money for upcoming financial liabilities or events. Additionally, creating a monthly budget and tracking your spending habits can help you identify areas for improvement. Prioritise essential expenses and set aside a portion of your income for emergencies and future financial goals.
5 Strategies to clear debts without depending on credit
Yes, depending on credit may put you in a new debt trap. It is especially true if you cannot pay the dues on time. Here are some strategies that may help you clear debts independently:
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Step 1- Write payments and focus on priority debts
Make a list of the dues that you must pay by the date on a notepad. Mention the debt name, payment date, amount, additional penalties (if any), and interest costs. Now, focus on the priority debts that are essential for living.
These include rent, mortgage, council tax, income tax, essential food, or medication costs. Alternatively, non-priority debts may include credit cards, student loans, store cards, overdrafts, buy now pay later, etc. You can repay these after paying the priority debts.
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Step 2- Build a realistic repayment budget
Check whether you can build a realistic repayment budget by calculating your monthly income, expenses, debts, etc. Check how much you can repay towards each priority debt. Make a list of the amount you can repay against the amount you are liable for. Do this for each payment that you must pay after Christmas. It will give you an estimate of how much you can afford to repay.
Also, determine the extra or miscellaneous expenses that you spend on without realising. It may also help you save money. If you failed to budget for a repayment and it is an important bill, check the personal loans in Ireland marketplace. It may help you finance the requirements without wasting time. You may repay the bill and pay it early to save interest costs.
It is only ideal if your creditor allows it. This type of loan has high interest rates on the borrowed amount; if you are not able to repay it, you may lose your property. Some creditors do not allow you to borrow money if your financial background is not good.
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Step 3- Decide on the repayment strategy
Analyse the most comfortable way to clear the debt. There are usually 2 ways you may consider. The first one includes Debt Avalanche. It means paying the minimum on all accounts and putting the remaining money towards the most expensive debt from an interest perspective. This strategy is the best if you want to reduce the total borrowing and optimise your financial standing.
Alternatively, you may check the debt Snowball method. It means paying the smallest debt first, then the next smallest debt and so on. Small amounts give you the confidence to clear debts or get debt-free quickly.
Which method should you choose?
- Choose Debt Avalanche if you want to minimise the interest liabilities.
- Choose the snowball method if you need momentum and are likely to give up on the financial progress.
- Choose priority-first debts if you have missed rent, energy and council tax, or any other payments.
- Step 4 – Try to increase income without borrowing
You can try different ways to earn more money to counter Christmas expenses. Here are some aspects that you may consider:
- Selling unused items, such as clothes, electronics, and furniture
- Check whether you can do overtime, extra shifts, etc.
- Analyse the grants that you may qualify for
- Check your tax code if your finances and circumstances have changed.
- Ask your energy supplier about payment plans, grants, or hardship support.
- Step 5- Use free debt advice (if required)
You may contact an independent debt advisory like MABS (Money Advice and Budgeting Service) and the Insolvency Service of Ireland (ISI) for help. They will help you take the right action regarding the debt payments. The financial team will support you when you need to know any information related to your loan amount, repayment, fees and terms. The lenders from whom you borrow money for your needs will check your affordability and credit report before giving approval for your application.
Bottom line
If you have too much debt and are worried about clearing debt without depending on credit, the blog may help. It lists the strategies that might help you analyse your affordability and repay each debt accordingly. Check your monthly outgoings, income, and emergency cash needs. Accordingly, you may draw a repayment plan.
If you struggle to clear the Christmas debt, but don’t want to borrow money for that, the blog may help. It lists the strategies that might help.
