Curing a New Year debt hangover
It's easy to overindulge in holiday season spending. If your finances have taken a dip in the red during the festive season, check out our 5-step holiday debt hangover cure.
Get back in the black and meet your money goals in 2024.
January is a great time to put your finances under the spotlight and set a few targets for the year ahead.
But achieving your goals can be a lot harder if you’re dealing with a holiday debt hangover.
And plenty of us could be facing just that.
Research by Australian Consumer and Retail Studies at Monash Business School , found Aussies planned to spend an average of $427 on Christmas gifts for close family, $246 for extended family, $149 for friends and $266 for themselves, plus $132 for workmates.
That’s a staggering $1,220 in total.
No matter whether you charged festive purchases to a credit card or buy now, pay later (BNPL) options, Christmas is behind us, the holidays are over, and the bills requesting repayment are about to arrive.
That makes it important to take fast action before interest charges start mounting.
Let’s dive in and look at 5 steps to help you to take control of your debts and start 2024 on the right foot.
1. Know where you stand
Fixing any problem starts with understanding it.
Refusing to open credit card statements can only make matters worse, especially if you skip a repayment, which can affect your personal credit score.
So, don’t bury your head in the sand. Take a moment to get a clear idea of exactly how much you owe – and to who.
2. Set up a payment schedule
Draw up a schedule for paying back debts.
If possible, aim to repay more than the minimum required. This way you can steadily chip away at the balance and reduce the interest costs.
If you have BNPL debt, make a note of the due date for each payment. Miss these and you could be slugged with expensive penalty charges.
3. Take a break from spending
Take a well-deserved break from spending, which may only add to your debt.
Use the holiday season to rethink regular bills, in particular any subscription services you don’t use. Trimming back on dining out and entertainment costs can also help you scale down debt.
4. Consider a credit card balance transfer
If you’re carrying a big credit card debt, the ongoing interest charges can make it hard to get ahead.
That’s not surprising when you consider Reserve Bank figures show the average credit card interest rate is a whopping 20.07%p.a.
Even among ‘low rate’ cards the average is 13.08%p.a.
Community First's Low Rate Credit Cards come with one of Australia's lowest credit card rates and an attractive balance transfer offer. Find out more here>
5. Focus on goals, not resolutions
The New Year is a time for resolutions. But they usually fail because we often don’t map out the necessary steps to achieve the goal we’re aiming for.
To successfully achieve your goal of debt reduction, you need a concrete action plan – and the tools to support you.
That’s why Community First provides a range of online calculators to help you turn goals into reality.
Jump onto our:
• Budget planner, and
• Credit card comparison calculator
They can provide the inspiration you need to knuckle down and pay off your Christmas debt.
Get a head start on Christmas 2024!
Community First’s Christmas Cracker account is a smart way to prepare for the 2024 silly season.
This clever savings account lets you grow a festive stash of cash helped along by a generous serve of interest. A fee applies if you access your Christmas Cracker account after 1 February and before 1 November, so you have a good incentive to keep saving through the year.
Deposit as little as $20 each week to have over $1,000 tucked away by December, and enjoy a cracking Christmas!
We’re here to help
If festive debt is keeping you awake at night, talk to the team at Community First.
Pop into one of our Community First stores or call the Community First team on 1300 13 22 77 to see how we can help you scale down your debt.
Credit eligibility criteria, terms and conditions, fees and charges apply.
This information is general advice only and does not take into account your objectives, financial situation or needs (your "personal circumstances"). Before deciding whether to buy any product you should consider your personal circumstances. You should read and consider the Terms and Conditions when deciding to use any product (terms and conditions, fees and charges may apply). Our product Conditions of Use are available at www.communityfirst.com.au.
Community First Credit Union LimitedABN 80 087 649 938 | Operating as Community First Bank | AFSL and Australian credit licence 231204| BSB 512-170