With Christmas and most of the big post-Christmas sales now in the rearview mirror, many Australians are waking up to a massive spending hangover. While exact figures for this year are not to hand, history suggests that the average Australian will add over $1700 to each credit card that they own over the Christmas/New Year period. That sort of spending can undo a lot of good work.
When confronted with this situation, it is important to take ownership of the problem as quickly as possible. What is done is done. There is no sense in compounding the problem by sticking your head in the sand. Acknowledge where you are and take steps to recover from the situation. Credit card debt can be a millstone around your neck unless you get on top of things. Here are the key steps to take.
- Thoroughly review your situation. Look at all your debts, your current spending and construct a budget that will help you to take control.
- Make the clearance of high interest charging credit card debt your number one priority. Make sure you at least maintain minimum payments on all other debts but focus on clearing the debt that is costing you the most.
- Investigate 0% credit card transfer offers. They may help, but make sure that you understand exactly what you’re getting into. Pay particular attention to fee structures and the interest rate applicable after the honeymoon period.
- Consider consolidating debts. It may be possible to package up your debts into a personal loan or even to refinance them as part of your existing mortgage. The potential monthly savings need to be weighed against set up costs and teh overall long term effects on your mortgage.
- Seek guidance from financial experts. If you would like assistance with restructuring your debts, a consultation with one of our finance brokers may help you to get back on track
- Once in control, implement a plan to ensure that you don’t get caught again. Make a savings plan specifically for Christmas and stick to it.