Money
How to get your finances back on track after the silly season
We’ve all been there – splurging on gifts, food and merriment feels great in December, but now it’s January and those credit card statements are hitting hard.
By Bron Maxabella
We never learn, do we? We’re all “let’s treat ourselves!”, “it’s only money!” and “it’s my shout!” throughout December. Come January, our generosity is starting to bite.
You’ve racked up the credit card beyond your ability to pay it off in full within the month.
There’s nothing left in the “rainy day” fund because it appears to have been raining non-stop since November.
And to top it all off, the car rego is due, the water bill is ridiculously high and the washing machine is leaking water faster than your bank account is leaking money.
Take a deep breath – we’ve got you.
Here’s how to recover from a festive spending hangover so you can start the year feeling good. Plus some tips to be just a little smarter next Christmas…
Take charge of your credit card debt
Tackle your balance head-on by setting up automatic payments from your savings account.
Remember to pay more than the minimum due to avoid staying stuck in debt. The Shape of Money credit card calculator reveals that if you had a credit card debt of $1,000 earning 1% interest (Reserve Bank of New Zealand states that the current average interest rateremains at 19.7%.) you’d take 8 years to repay your debt and pay an additional $1,728 in interest on top.
Really makes you rethink those minimum repayments, right?
The bottom line is, you need to clear that credit card debit as soon as possible, so put everything you can possibly spare towards it until you’ve paid it off.
If overspending is a habit that extends beyond the festive season, consider cancelling your card after paying it off – it removes temptation.
Combine and conquer your balances
Have multiple cards? Consolidate them into 1 with the lowest interest rate – you might even be able to get a balance transfer card at 0% interest. Balance transfer deals can save you loads of interest and help you pay off debt faster. Shop around to find the best option.
Sell unused gifts
It’s not something we like to talk about, but everyone receives unwanted presents at some stage. Just because someone you love has given you something you don’t love, doesn’t mean you have to keep it. Sell it on Gumtree or eBay instead and put the cash towards paying off your credit card debt.
Word of warning, Facebook Marketplace is a great place to sell unwanted items as well, but it might mean your sale is visible to your family and friends… your call!
Have a fabulously frugal February
February is a great month to really cut back hard on your spending. The summery holiday feeling of January makes it just too tempting to splurge on a meal out or a quick weekend away at the beach.
Come February, it’s back to our regular routine and there are no more excuses. Here are some suggested ways you can be extra frugal in Feb:
- Meal plan and cook all your meals at home
- Make it a ‘buy nothing new’ month
- Use a grocery app to save big
- Pack an evening picnic instead of eating out
- Take advantage of your local library for books, movies and games
- Cancel your monthly streaming subscriptions for the month
- Walk, bike or take public transport instead of driving
- Pay for everything you can using cash
Go on, it’s only for a month, you can do it!
Start a side hustle
Okay, this one might be a bit more effort than you’d like, but there’s no doubt that earning more is the quickest way to pay off debt. It’s surprisingly easy to start a side hustle that brings in some extra income. Check out this list: 12 old-school skills that can make you extra cash.
You can also put your admin, accounting or writing skills to work picking up freelance jobs on places like Fiverr or Upwork. And don’t forget to go old-school and enquire about casual retail or hospitality work at places like Bunnings, Kmart or your local coffee shop.
Just be sure to declare any additional income you make on your tax return – and keep thorough records of any expenses you incur so you can claim them back when you do your return.
Make next year different
Avoid next year’s debt trap by starting now:
- Set a budget: Decide how much you’ll spend on gifts, food, and fun—and stick to it!
- Hunt for deals: Shop sales and compare prices online at places like iSelect throughout the year.
- Use your supermarket app: The Woolies Everyday Rewards program lets you bank your cashback to use at Christmas. It’s like an enforced saving plan.
- Save weekly: Open a Christmas savings account and add a little each week—it adds up fast.
Feature image: iStock/Ridofranz
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