The holiday season brings with it more than just presents and cheer. Unfortunately for many of us, it also brings increased debt. Dealing with debt is what prompts many to make New Year’s resolutions of getting their personal finances in order.

One of the problems we have is that it is so easy to just put purchases on a credit card. It’s convenient, easy and we don’t actually “see” the money go. And if you can’t pay off the balance, it’s easy to just pay the minimum and move on with the month. And this is what causes trouble for many people: paying only the minimum ensures that you are in debt for a very long time.

Dealing with holiday season debt

Here are some tips to help you get back on your feet financially:

    • Assess your situation. Summarise your financial position, including your assets, liabilities and monthly cash flow. Recognise and accept that you must make some changes to your spending habits.
    • Consolidate your debt. A debt consolidation loan often has a lower interest rate than credit card debt and sets out a timeframe to pay off the debt, but don’t take more than six months to a year to pay it off or you will compound the problem for the following year’s holiday season.
    • Cut your expenses. Get rid of unnecessary expenses and luxuries. Temporarily cancel DSTV, use only a prepaid cell phone, eat out less often and cut down on takeout coffee, entertainment and other extracurricular activities.
    • Avoid getting into debt in the first place. You can avoid post-holiday season debt altogether by budgeting and planning. For example, if you plan to spend R2000.00 during the holiday season, and you set aside R200.00 a month between February and November, you will have saved what you need and will start the New Year debt-free. If you lack the discipline to set money aside on your own, arrange to have a portion of your salary automatically deducted from your paycheque and deposited into your savings account.
    • Talk to a chartered accountant or debt counsellor. He or she can review your plan to get out of holiday season debt, help structure your debt consolidation and review your cash-flow considerations.

You can get out from under that cloud of holiday season debt. But it means that you truly have to start the new year off on the right foot.

 

Our Employee Wellbeing Programme (EAP) is available 24 hours if you want to discuss your festive debt.