5 ways to take on your Christmas debt
Investments Commission reports that on average, each of us planned to part ways with $955 during the holiday season1. On top of this, 36 per cent of us Aussies plan to use a credit card to support spending habits during this period2.
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1. Find the right advice |
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Financial counselling, whether from a professional or from your bank, can be crucial when it comes to managing Christmas debt. For example, here at IMB we can give you the quickest of financial health checks, from which point you could talk to one of our financial planners about smoothing over your post-Christmas debt. |
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2. Plan ahead |
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How long do you take to pay off Christmas debt? ASIC reports that 82 per cent of Australian's are free of credit after six months, 11 percent in up to 24 months, and 2 per cent pay of the debt in 2+ years4. Plan out your repayments, how long they will take, and the maximum you can comfortably pay off each week. This can make for a more palatable situation than letting it build up and spiral out of control. |
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3. Consolidate |
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Sometimes, it's an appealing option to simply roll all your debts into one package. This can be done with refinancing, a consolidation loan, or even by transferring lines of debt to one credit card account. However, it isn't necessarily the best option, as fees can leave you worse off than when you started. But when interest rates are at significant lows (as they have been over the last year or so), it can remain a possibility. Of course, such a big decision to tackle your debt will require the assistance and input of a financial professional to help you down the right path. |
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4. Pick your priorities |
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Have you ended up with multiple lines of debt after the holiday season? Prioritise them in order of most to least important to pay off. It could be the debt with the highest interest rate that gets targeted first, or the one with the smallest outstanding payment, as it can be addressed quickly. Once you decide which debts will be tackled first, make sure to limit your spending to one of these lines of credit, so you don't keep the cycle going5. Prioritisation makes perfect! |
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5. Ever used equity? |
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If you've been sitting on a home loan for quite a while now, there's every chance that you have built up a significant amount of equity in your property. This could be unlocked if you refinance a home loan to tackle Christmas debts. However, it can pose similar risks to consolidating debts, in that fees could put you out considerably. There are many options for taking on the post-Christmas debt blues, and the process doesn't have to be stressful at all. |
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Make an online enquiry if you would like to know more about your options for debt consolidation.
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Sources:
1 Australian Securities and Investments Commission (ASIC), 'MoneySmart: Australia's Christmas Spending', Accessed 6 December 2017
2 Australian Securities and Investments Commission (ASIC), 'MoneySmart: Australia's Christmas Spending', Accessed 6 December 2017
3 Australian Securities and Investments Commission (ASIC), 'MoneySmart: Australia's Christmas Spending', Accessed 6 December 2017
4 Australian Securities and Investments Commission (ASIC) 'MoneySmart: 'How to pay off multiple credit cards', Accessed 6 December 2017
