January is the time of new starts but unfortunately for many people, the Christmas hangover is lasting a little longer than anticipated.
Christmas is, or at least should be a joyous occasion, but it is also the time when individuals and families sink into, or spiral further into debt. Whilst the new year should be a time of new opportunities and looking forward to the future, many are faced with the problem of how to deal with their financial struggles.
So what can we do about it?
Don’t wait until January to solve your financial problems
Hindsight is a wonderful thing, of course, but the best way of stopping those financial blues is to head them off at the pass.
With a bit of pre-planning and careful budgeting, it is possible to keep spending to a minimum and still have a great Christmas. If it’s within your means to do so, why not start thinking about ways you can save over the next 12 months in preparation for next Christmas. I know we’ve only just got over the most recent one, but giving yourself plenty of time to prepare financially is one of the most sensible options and will help you to keep within your budget.
It’s too late for that, I spent too much. What can I do?
Firstly, don’t panic. The financial blues are common in January as we all take stock of exactly how much we spent. Try to make a realistic assessment of where you are as soon as possible and work out exactly how much you owe and when it needs to be paid back.
Don’t ignore it. It’s a worry but facing it head on will help you to manage it sooner, rather than letting it spiral out of control.
Prioritise the important debts
All debts need to be paid off – but some take higher priority than others. Make sure you are able to pay off any debts such as mortgage payments or other secured loans that put your home at risk if they go unpaid. Other debt will also need to be managed, as left unpaid could damage your credit score and leave you at risk of CCJS. Try to focus on clearing those with higher interest rates first.
Don’t borrow any more money or spend unwisely
January’s financial blues can be really difficult. But please don’t borrow more money to try and make it better. This is just a vicious circle and one that can be very hard to get out of.
You’ll probably see lots of adverts promoting quick and easy loans, but interest rates are often high and can leave you with a much bigger problem than before. They are best avoided where possible. Not all loans are bad, if you do need to borrow money, make sure you do your research first and always read the small print.
Use your willpower to avoid the January sales. These can be very tempting but rash purchases that you don’t really need will just impact on your financial woes even more. Nowadays, particularly with online shopping, you can find bargains right through the year – if you need something. There is no need to rush out and spend more money in January.
How can I pay off my debts?
If you’ve maxed out your credit cards and struggling to pay off the high interest charges you may be able to move the balance onto a 0% balance transfer card.
This means that for a limited period you can freeze your debt without the worry of it growing. This will at least allow you to set a realistic budget and pay off a chunk of your debt each month.
Try to pay it all, or as much as you can, within the time limit of the card. Outside of this period, the interest rate will shoot back up, and you may not necessarily be eligible for another balance transfer.
Curb your spending habits
The new year is an ideal time to review your finances and evaluate your spending. Try to rein in any unnecessary purchases. This could mean taking your lunch to work instead of buying it, and cutting out all those coffees that you pick up on the morning commute. Even the smallest of savings here and there can have a significant impact on your finances over the course of a year.
Things are much worse than I thought
Hopefully some of the tips we’ve given will help you to beat those financial blues and get your finances in order for the rest of 2020. However, if you are really struggling and it’s going to take more than a simple fix, then it’s worth seeing further advice. Free and confidential debt advice is available from places such as Citizens Advice – having someone to share your problems with in confidence can be a great help to shift those financial blues and start looking forward to a positive future.
The above post does not constitute advice – financial, legal or otherwise. The information within this article is the author’s own opinion and do not necessarily reflect the views of SO Media or So Smart Money.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.