Bills starting to land in your inbox from your Christmas spending?
Don’t panic. Now is the time to take stock of your finances and put actions in place to:
- Pay off your Christmas splurge hangover, and,
- Set realistic 2022 financial resolutions to break the debt cycle and get ahead.
The festive season is a time when budgets can go out the window. Next minute, your savings are depleted, your credit limits are maxed and debt is sky high.
Here are our top tips for paying off that seasonal spending splurge:
- Gather all your statements and bills – bank statements, loan statements, credit card, AfterPay bills etc. Once you have them all, make a list of all your outstanding amounts.
- Become friends with your debt. You can’t hide from these bills, so, for each bill make a note of the outstanding amount, due date and interest rates.
- New debt = time for new budgets. Create a 2022 budget. Calculate your income in and expenses out. Remember to also include the likes of annual fees on credit cards and bank account fees etc. All these ‘incidental’ amounts make a difference to your budget – and potential saving options.
- Map your financial picture: what you own, what you owe, how much you earn and what you spend.
- Now that you have a solid budget, look at potential ways of reducing debt sooner – can you consolidate your debts into one lower rate loan? Which debt has the highest interest rate? Consider making extra payments on this debt to pay it off sooner.
- Set up BPAY through your internet banking to ensure debts are paid before the due dates to avoid unnecessary late fees.
- Be patient – paying off debt can take some time. Constantly chipping away at it pays dividends in the long run.
- Avoid taking on any more debt (if possible) until your existing debt is reduced or manageable.
Now that you have a budget and plan in place for paying off your debt, here’s some 2022 finance resolutions for you to work towards to help save money. Write down your 2022 financial goals – saving for a car, home loan, business improvements or starting a new business?
Next, how can you achieve these goals?
- Reduce debt (which if you have taken our advice above, you already are working towards this – yay, go you good thing!)
- Build your passive income. Side hustle or second employment perhaps?
- Set up a rainy day and/or emergency saving account and contribute each pay cycle.
- Insurances. We all have them, but are we getting our money’s worth? Shop around, compare and if there is a better deal elsewhere, change providers.
- Have you checked in on your superannuation lately? Do you know how it’s performing, or is it underperforming? 2022 could be your year to rekindle the spark with your super.
- Join some likeminded face book pages such as – Australian Debt Free Community.
- Have you got a will? If not, get one. If you do have a will, check to make sure it is updated for your current life situations – you might have upgraded your home, have accrued more super since you last looked at your will. It’s important your intentions and financial credentials are sorted in your will.
The above is a snapshot of some of the ways you can work towards financial freedom in 2022.