The holidays are over and we’re well into the new year. It’s a time to follow through on the goals that we set and to feel optimistic about the future. But, if you’re carrying debt over from last year’s holiday spending, it can feel like a weight dragging you down. Before you start stressing about looming debt, here are 5 tips to help you tackle holiday debt and get your finances back on track again.

1. Assess your situation

Before you do anything else, take stock of your financial situation by reviewing your budget and your financial goals. Create a spreadsheet and list all of your debt, payment due dates, minimum payment amounts, and interest rates. Decide on the timeframe in which you’d ideally like to pay down your debt. And if you haven’t already done so, give some thought to your future financial goals for the year ahead.

2. Choose a payment strategy that works for you

When it comes to clearing holiday (or any) debt, there are two strategies you could use to help you stay focused on paying down your debt and getting debt-free in time. Choose the strategy that works best for you – or use a combination of strategies. Whichever you decide, pay more than the minimum payment if you can and always make repayments on time.

The debt avalanche method suggests paying down the debt with the highest interest rates first, to help reduce interest charges and save you money. With the debt snowball strategy, you focus on paying down your smallest debt first and work your way through all debt regardless of interest rate. Each debt that is cleared is another goal reached and a motivator to keep you going.

If you need help managing your debt, get in touch with a financial counsellor and get free financial counselling.

3. Stop spending needlessly

While paying down your debt is essential for getting you out of a debt situation, it’s just as important to curtail unnecessary spending. As well as cutting back on non-essential items, try tracking your spending to see where you can cut costs and save dollars. Here are a few ways to cut back:

• Car pool to work
• Make coffee at home
• Bring a packed lunch to work
• Fill a reusable water bottle
• Take advantage of free activities
• Review utilities like phone, internet, cable TV and decide which you could let go of even just for a short time
• Get involved in a local charity and volunteer your time to stay busy and active in the community 

4. Use windfalls and bonuses wisely

Avoid thinking of bonuses as free money you can spend. Rather focus on your financial goal of being debt-free and use this money wisely. Make a dent in your debt by directing any bonuses, tax refunds or windfalls into paying down what you owe.

5. Start saving for next year

It’s never too early to start saving for your next holiday spending. Set aside a small amount each month in a separate savings account that can be used to pay for gifts, travel and entertainment at the end of the year. Start now putting away $50 a month and by the end of the year you’ll have $500 to spend! What’s more, you’ll be spending your own money so you won’t start the new year in debt again.

Remember to regularly check your credit score to ensure it’s not negatively impacted by your holiday spending. And get help sooner rather than later if you’re struggling to meet your repayments. Get in touch with a Mortgage Express broker for financial advice tailored to fit your circumstances.

While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.

Finservice Pty Ltd (Mortgage Express) is authorised as a corporate credit representative (Corporate Credit Representative Number 397386) to engage in credit activities on behalf of BLSSA Pty Ltd (Australian Credit Licence number 391237) ACN 123 600 000 | Full member of MFAA | Member of Australian Financial Complaints Authority (AFCA) | Member of Choice Aggregation Services.