How To Recover From Your Christmas Debt Hangover?

The festive season has been and gone. The gift-giving and endless food and drink has given way to introspection and desperate attempts to keep the New Year's resolutions that seemed so do-able only a week ago. However, for many Britons, the hangover isn't limited to a vision-blurring headache, churning stomach and severe dehydration. With the average family Christmas spend equalling roughly four times the average weekly disposable income, it is estimated that British consumers will spend around £11bn over the 2009 Christmas period, with approximately 80% of that figure consisting of credit and store card transactions, hire purchase, and other credit arrangements. Alarmingly, many of these credit arrangements last a year or more, ensuring the post-Christmas hangover never really goes away. Alcohol hangovers are unpleasant, but fortunately there are myriad cures available, from the scientifically proven to the totally bizarre, but cracking a couple of raw eggs into a milk shake won't get rid of debt so easily. We've looked at some of the ways you can put a bit of 'plink plink fizz' back into your finances and get back in the black sooner, without resorting to 'hair of the dog'... 1) REVISE YOUR BUDGETrnTake a fresh look at your situation. Start by making a note of how much money comes in and goes out. Then break down your debts and outgoings into a list, organising them in order of importance. Naturally keeping a roof over your head and paying the bills should come first, so make sure rent/mortgage payments and utilities are top priority, but also make sure that debts with higher interest rates are placed further up the list than the 'cheaper' ones. Travel to work should also be considered essential. Once you have done this, you will have a much clearer idea of how much you have available to pay off your debts. 2) CUT YOUR SPENDINGrnCutting out small luxuries like a daily coffee and a pastry and making a packed lunch instead of eating out will save several pounds a day, which over the weeks will quickly have a noticeable effect on lessening your debt. Try and avoid using your car for unnecessary local trips, which are heavy on high-priced petrol, since such frequent small expenditures really chip away at your funds. In addition, by walking or cycling more you can feel better about your impact on the environment as well. 3) LOOK FOR BETTER DEALSrnThe days where being a long-term customer would ensure better deals are all but gone. Utilities companies, communications providers and insurance brokers all compete for clients, and many offer decent discounts as an incentive to switch, and many good deals can be found on the web. According to our research based on data from popular price comparison websites, someone switching energy suppliers for the first time can save hundreds of pounds on their annual bill. rnPhone and Internet contracts typically last 12 to 18 months, and it is definitely worth considering switching providers once the contract has ended, since not only do service level prices keep dropping but technology is constantly improving. This year my mother switched to a new provider offering the latest fibre optic line technology. The original provider offered to match the price, but couldn't match the speed, which was around five times faster for roughly £8 less every month. It's also a good idea to look at how much you are being billed for your mobile phone calls. Most handsets have a three or four year lifespan, but the phone companies like to push new ones on us regularly to make sure we are contractually obliged to stay with them. Instead of upgrading to the latest model this year, why not hang on to the old one a bit longer and move onto a fixed-cost SIM-only deal. You'll get the same service for around half the cost, and you'll be free to move elsewhere should you see an unmissable deal later on. Finally, when insurance policies are due for renewal, shopping around will almost always save you money. Making use of online price comparison tools will provide you with the information you need either to switch insurers or to negotiate a better rate when renewing your policy. Again, insurers are interested in customer retention, so if they think they will lose you to a competitor they will often offer a better deal as a last-ditch attempt to keep you on their books. 4) ARE YOU MISSING OUT ON 'FREE MONEY'?rnWell, OK, perhaps 'free' isn't really the best way to describe it, but around £5bn goes unclaimed every year as thousands of people in the UK fail to claim tax credits and other benefits to which they are entitled. People often don't bother investigating tax credits as they are put off by the perceived hassle, or are unaware that they may be eligible for child benefit. It's worth having a look at the YouGov website or consulting the Citizen's Advice Bureau for advice on what you can claim and how to go about doing it. 5) GET SOMEONE ELSE TO HELPrnWhat if you've read this far and it all seems like too little, too late? Perhaps you budgeted everything out carefully and you only just have enough to meet the minimum monthly repayments – you keep paying out, but the balance never seems to get any smaller? In that case you might be better off making a Debt Management Plan your New Year's Resolution. Increasing numbers of people are turning to Personal Debt Management Consultants to negotiate the best terms, freeze interest and simplify the repayment process. rnHaving a third party manage payments and negotiations is extremely liberating and allows you to ensure your repayment budget really does go towards paying off your debt as opposed to simply keeping it from increasing. By seeking advice tomorrow, you could be debt-free sooner!