Balancing Finances: Credit Recovery
We all do it. A year of careful financial planning, stringent spending limitations and careful credit watching all goes out of the window as soon as December comes along and the sights and sounds of Christmas turn us back into children eager for toys.
It’s even worse once you are a parent, listening every day to the boundless enthusiasm and excitement of your children discussing everything they’d like Father Christmas to bring them, from chewing gum (which you can afford but don’t want to end up on the carpet) to castles (which you really can’t afford, and again would need consideration regarding carpets).
Unless you are one of the select few who have the stern strength of will to resist temptation at every corner (and congratulations to you if you are), you find yourself coming out of the far side of most Christmas’s with overdrafts and credit card bills which you can turn the new year into a money worry instead of a joyous celebration of a bright future.
Not to worry – here at Compare UK Quotes we have some answers.
Consider a balance transfer credit card
So, you overspent – chances are you are more than happy to pay it back as soon as possible, but do you really want to add to the bill with a chunk of interest that makes a little Christmas indulgence into a heavy weight on the shoulders? Of course not.
A balance transfer credit card allows you to move the heavy load pulling your main credit card down to an interest free alternative that you can pay back at your leisure.
Not only does it stop you paying interest on all those purchases, but it also frees up the original card to be used (judiciously) through January for normal life.
Most balance transfer cards come with an extended period of interest free term that can be as much as 32 months. Hopefully you don’t need that long to recover from one Christmas, no matter how over-the-top you went, but if it’s needed then it’s there for you.
There’s often (but not always) a small transfer fee – so take that into account before applying, but all in all, a balance transfer card is a great way for many to shift the mistakes of an enthusiastic Christmas aside to be dealt with calmly and begin the new year solvent.
Look at a consolidation loan
An unsecured personal load for consolidation is another way of moving your Christmas debt from one place to another. Unlike a balance transfer credit card, however, this doesn’t come with an interest free period and the repayments are set rather than flexible.
Taking out a consolidation loan purely for the excesses of Christmas is a little extreme – it’s a bit like the proverbial sledge hammer to smash a nut, but when considered as part of your overall finances moving into the new year it can take on a more appropriate tone.
If you are worried about the extra Christmas spend, the chances are that you are also struggling under other longer-term financial issues: an overdraft, maxed out credit cards or a previous loan with a high interest rate. If any of these are the case, then a consolidation loan could have you move into the 2020s with a clean slate.
If you want to find out more about personal loans and consolidation loans, take a look at our range of articles on the subject.
Start some careful budgeting
With no need for any credit card or loan applications, you may be able to get yourself back into good standing by nothing more than some careful personal budgeting.
It is amazing how many of us struggle through the month because we don’t take the few hours aside to properly manage our finances. By taking a little time to go through your bank statement line-by-line, you can often release money from all sorts of places – from cancelling old gym memberships that you never use, to cutting back on the number of takeaways you have a month.
There’s never a bad time to start careful budgeting and the overspend from Christmas may be the impetus you need to start the new year as a responsible personal financer!
There are a range of apps and other helpful tips to promote careful budgeting that can be found in our article on the subject.
Contact your creditors
One of the mistakes people often make is to try to avoid dealing with financial issues by ignoring all the letters pouring in the door and hiding their head in the sand like a panicked ostrich. It’s a system that never works – you don’t even get a moment of peace because the back of your mind niggles, fully aware that there’s something horrible hiding in that brown envelope.
There are very few legitimate creditors in the country who aren’t willing to help you if you open up honest communication with them. At their discretion, banks can waive troublesome charges, power supply companies can recalculate direct debit payments and spread the cost of any outstanding debt, mobile phone companies can cut back on contract terms or simply move a direct debit date to help your finance management.
There are no creditors in the country who can help you if they don’t know you need it!
Contacting your creditors if you are in trouble is the most important thing to do and the chances are very high that you’ll be able to sort something out.
Not an invitation to go back to that head-in-the-sand idea, but a little understanding. It is important that you calmly deal with any financial headaches that are plaguing you over the period, but there’s no need to worry for the sake of it. If there’s a particular situation that has your head all in a muddle, then take a step back and give it the thought and attention it deserves. Once you have done everything you can about something, move on and enjoy your time.
Remember that almost all financial problems are resolvable through honest communication and a solid plan. If you are panicking, then talk to someone – a friend or family member, or one of many helpful organisations like the citizen’s advice bureau.
When Christmas and the New Year come, give yourself some time off and spend it the way you enjoy the most!