Steeped in Christmas debt? A 5-step plan to get back on track

25th Jan, 2016

We’re back here once again, to that all familiar feeling of despair when we realize that it’s January, the bank account is empty and we have to get through all of January. Even worse is when one realizes that there is no alternative source of income to tide you through.

It’s a familiar pattern after the holidays – borrowing and spending more than we are earning, and regretting it. We make resolutions to stick to our budget through the new year, but come March, we’re back into our spending habits. After all, YOLO, right?

Post-Christmas debt is a worldwide phenomenon, so you shouldn’t really feel like you’re the only one in this never ending spiral. Even worse is that retailers try to cash in on our need and guilt to spend on expensive gifts and holiday plans, and everyone is coming at you with what seems like the best offer ever.

So, how do we conquer these habits? Here’s a quick 5 step program that can get you back on track:

  1. Acknowledge the debt: by accepting that the December habit is a bad one, you’re already one step into fixing this. Instead of going back to the same habits as soon as the year is halfway through, start by understanding that this happens due to what is essentially bad planning.
  2. Add it up: Do you know how much you really owe? Calculate what exactly you need to pay back, and to whom. Credit cards, friends and family, bank loans, salary advances – all those are debts that need to be settled as soon as possible. Once you have the amount and when it’s due, you know where the problem lies and how to tackle it.
  3. Make a plan: Start focusing on how much you can pay, and when. Focus on the high interest and short term payments and see how fast you can get them repaid. If you have loans that can wait without accruing interest, make it clear to the creditor that you will settle it – just not immediately. This can especially work with family and friends who are willing to give you a bit of leeway.
  4. Look for savings: Are you still spending as highly as you were last year, and are you able to sustain that lifestyle? Cutting back on unnecessary spends can help you channel the savings into debt repayment. It could come from the simple things – that expensive lunch at work, the nights out at the bar, those shoes you really, really Do you have things you don’t need and can sell? Get rid of them and earn as you do it. Cancel unnecessary credit cards. Focus on making your spend less, and your savings more.
  5. Plan for the future: To make sure you don’t go down the same drain again, start working towards planning for the high season spending. Create a savings account just for the holidays, and make a plan on how much you want to spend, then save towards it. As you know, haba na haba hujaza kibaba. Those wise men knew what they meant.

Does it sound simple? Yes. Is it simple? Yes.

Spending habits are exactly that – habits. The faster you train yourself in managing your spending is the faster you’ll get into better money management. Are you ready to give it a go? Let us know if this works for you!

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