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Helpful tips to recover from post-holiday debt

25 January 2019

At this time of year, many Australian households are scrambling to pay off larger-than-usual credit card bills from the festive period. Whether it was overindulging on Christmas gifts, that big holiday or just a little too much socialising, all that additional spending can really impact your current and future financial situation.

To help you start the year on the right foot and overcome any post-holiday debt, iM CUA Personal Banker, Jessica has some handy tips on building savings, consolidating debt and managing your finances.

Tip 1. Start a savings plan

Savings are the platform for long-term financial security and confidence. Even the smallest amounts saved regularly can set you on the road to reaching your goals. So when you next get paid, try putting money aside for your living expenses. Use our budget tracker to see how much you’re spending and to help you budget for a savings plan. Then, deposit what money is left over into a high interest savings account. It’ll mean your money can be working just as hard as you are!

Smart Tip: Take your lunch to work, rather than buying it each day.

Tip 2. Take control of your credit cards

If you find yourself with multiple credit cards that never get repaid, you might want to consider paying them off with a small personal loan. Apart from the lower interest rate you may be able to access, a competitive personal loan provides the structure of making set repayments, which can help you stick to your budget and pay off the balance sooner. Next, close your credit card accounts or lower the limits to make them more manageable.

Smart Tip: Having smaller credit card limits will help you think twice before making impulse purchases.

Tip 3. Get saving early

Giving your kids a head start on saving is the perfect way towards them building financial independence later in life. So while they’re living at home with you, get them to set a savings goal. It could be a new car, an overseas holiday, moving out, or saving for a house deposit. Next, get them to open a high interest savings account with no account fees.

Smart Tip: Try to get them save a percentage of their pocket money or pay each week.

Tip 4. Match your insurance to your needs

As your life changes, so do your insurance needs. So ask yourself, when did you last review your insurance? Also think about what you’re looking to get out of them and base your decision on what’s important to you. Is it cheaper premiums, or the flexibility to choose the repairer of your choice? Is it being able to pay monthly, without any additional fees? By reviewing your insurances each year, you are can help ensure that you’re only paying for what you need.

Smart Tip: Many insurers reward you for giving them more business. By combining your insurance policies with one insurer you may be eligible for a multi-policy discount.

Tip 5. Make the most of your home loan

There are many ways you can save on your mortgage, which can free money up for savings or repaying other debts. Depending on your home loan, you may be eligible to have an 100% offset facility. An offset account is a transaction account linked to your home loan. The balance of the account is offset against the balance of your home loan, so that you save on the amount of interest you pay on your home loan. For example, if your home loan balance is $300,000 and you have $30,000 in your offset account, you'll only pay interest on a home loan balance of $270,000.

Smart Tip: See if you can make extra repayments without being penalised. It can reduce the principal balance quickly, as well as save you money on the interest paid.

Reducing financial stress and being more confident about your finances is easy when you set up (and stick to) a savings plan, earn interest on your savings and minimise the amount of interest you pay by consolidating debt. Following just a few of these tips could help you end the year in a much better financial position.

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