Top 5 tips to conquer your holiday debt

The holiday period is a time for food, fun and festivities. And generally, the last thing you want to do while you're on holidays is to track how much cash you're splashing, which means it can be easy to go overboard with your spending.

So, when it's time to get back to reality, you may find your debts are a little higher than they were in the pre-festive season. But, don't panic. Here are our top five tips to help you get on top of your holiday debt.

Know what you're working with

Knowledge is power. It might be daunting to face your debts head-on, but it could mean the difference between falling behind on repayments and damaging your credit score, or getting ahead.

You may want to create a list of all your debts which shows:

1. Each individual debt (i.e. list all credit cards, loans, fines or unpaid bills)
2. The amount of each debt 
3. The minimum monthly repayment on each debt
4. What the interest rates are on each debt.

This list will give you a clear picture of your financial situation, and it'll likely give you the motivation to start paying them off (bonus!).

Prioritise your debts

Some debts may take priority over others, because the consequences of not paying them may be more severe. 

Priority debts are things like your rent and mortgage payments (because you need somewhere to live), your utility bills (so you don't risk having them disconnected) and car repayments (if your car is essential for work or caring for your family).

Outside of your priority debts, you may want to consider paying off your debts with the highest interest rates first. This is because if you leave these debts longer, you may end up paying more in interest fees, and consequently, it could take you longer to pay off the debt.

Rejig your budget

Once you know what repayments are due and when they're due, you'll need to work out what you can afford to pay towards these debts. 

This means looking at all the money you have coming in each month from your salary, and then figuring out how much needs to go towards your necessities (i.e. your rent, bills, transport), and how much you can afford to put towards your debts each pay cycle.

Usually, you'll include some discretionary spending in your budget (i.e. after-work drinks, clothes, dinners out). However, you may want to curb any 'fun' spending for a while and direct your cash towards your debts, so you can get out of them sooner. In saying that, be realistic with your budget. If you make it too stringent, you're less likely to stick to it.

A good way to stay on the straight and narrow is to track your spending. You can do it manually, like a food diary. Include every single transaction - no matter how small - and assess your spending habits on the go. You may be able to identify some quick wins like cutting coffee, or old subscriptions you're not using.

Sell your unwanted items

If you want to make a big dent in your debts quickly, you may want to consider selling some of your unwanted items. It seems tedious, but on average, Aussies have around $5,300 of unwanted junk in their house that they could sell in the circular economy.

So, hop on eBay or Gumtree, and post that old mirror you've got sitting in the garage, the desk you're not using, those weights that are collecting dust - or even that old iPhone 8. Then, put the money you make towards your debts.

Consider debt consolidation

If you're juggling a few different debts and it's becoming hard to manage, you could consider a tactic called debt consolidation.

This is where you take out a personal loan and use the funds to repay your outstanding debts. That way, you're making repayments towards a single debt, rather than multiple. It means you're only paying one debt, with one interest rate, and one set of fees and charges. 

You can apply for personal loans with lenders like us here at SocietyOne. With SocietyOne, you can decide how much you want to borrow, and pay it back over a length of time that you choose. And we offer really competitive rates. 

However, you will need to meet some eligibility criteria, like:

• You need to be at least 18 years of age
• You must be an Australian citizen or a permanent resident of Australia
• You must earn more than $30,000 per annum (with Centrelink considered to be a supplementary form of income)
• You must have a good credit score.

You can check your credit score for free at SocietyOne! It's simple, quick and you'll have access to a whole bunch of features and benefits that will help you gain control of your finances.