January - a new year and a clean slate for everyone. The memory of Christmas dissipates from your mind as you gradually come to terms with the end of the festive season and the realisation that you may have spent a little too lavishly last month starts creeping in. If your pockets are dangling empty in the post-Christmas hangover, you are not alone. According to the Independent, about 80% of Britons resort to credit use to see them through the holidays and the Money Advice Service reports that 1 in 10 people fall into debt at the end of year celebrations.
It’s natural to feel a little down if your finances are less than rosy, however if the problem is not tackled head on this sombre mood can grow roots for the remainder of winter. So how can you improve your financial health to start the year off on the right foot?
Prevention is always better than cure and when you are anticipating additional expenses it’s wise to think ahead. Creating a holiday budget may help you by spreading the cost over several months and ensuring you have enough money put aside for your holiday spending. Set a reasonable spending cap according to your income and usual expenditure and track how much you are spending against your budget to help you limit the winter shopping rampage. Our useful guide on how to survive the holidays on a budget will help you create your very own festive budget.
Don’t panic if you’ve already overspent this year! Owing money can be nerve-wracking, however dealing with the situation in a calm and timely manner can help resolve the problem painlessly.
Start by reviewing your financial situation. The main factors to consider are:
Calculate how much is left over after you cover your priority expenses, such as your mortgage, council tax and household utility bills. Does your disposable income compensate the leftover bills and your debts? If you are lucky you may be able to repay your credit in one go, but if the money is tight you may need to rethink your expenditure. Are there any non-priority expenses that you can wave goodbye to and redirect the funds towards paying off your debt? Depending on how much debt you have and how much you can afford to repay, you may need to prioritise paying off your borrowings.
Whatever your circumstances, it is important to get in touch with your creditors so you can agree on an affordable repayment option. Most creditors will gladly work with you to try to accommodate your needs, however if your creditor is refusing to help at all, you may be dealing with an irresponsible lender who does not have good lending practices.
Sticking to your financial plan is important, however in life unexpected situations can arise quickly so it’s essential to keep a track on your finances to ensure that you can foresee and mediate any shortcomings promptly.
Thinking about finances can be uncomfortable and it’s easy to put off checking your bank account especially if you have an inkling that you more than likely let the money flow a little too freely, however sticking your head in the sand will only make matters worse. Taking back charge of your finances will help you feel in control and may soothe your anxiety. Remember that even the most careful planner can find themselves in this conundrum. Every experience in life teaches us something, and you can take this as a lesson on how to be well prepared for next year’s holiday season.
It is easy to be overwhelmed with the financial pressures that come with a new year, but don’t forget that you can always get free expert help to guide you on how best to tackle your arrears. Free debt advice is available in the UK through charities such as StepChange and National Debt Line.
We have all been guilty of overspending at one time or another. It’s easy to sulk and beat yourself up about it, but is that really a solution to the problem? Dealing with debt can be difficult mentally and practically, and there may not be a quick fix however there are always options available to you to help deal with your financial woes. With a little focus and determination, you can get back on track in no time!
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