Keeping your finances under control this festive season
The festive season can be a great time of year in Canterbury; warm weather, time off work for some, and the cheer of Christmas giving and family holidays.
It can also be a very expensive time, with pressure to spend on gifts and experiences stretching already pressured wallets to breaking point.
I think we can all relate to getting swept up in the festive season spending extravaganza. Cup and Show Week flows into School Holidays and then Christmas. The net result is often a string of hire purchases, lay-buys and easy pay arrangements, coupled with credit card debt and often personal loans to boot.
This string of finance arrangements with different providers, with repayments across a range of interest rates due at various times, can often be unruly and hard to manage... let alone afford. As a result, the festive season financial hangover can last for a lot longer than your average summer BBQ, day after headache.
New Zealanders collectively owe $15.39 billion in personal consumer debt as of June 2017 - a record level. A great deal of this debt is held at relatively high interest rates, which puts a lot of pressure on weekly cash flow in the months following our festive season spending binge.
So what can you do about it? Short of a big promotion in 2018, backing a winning outsider at the races, or digging out that lucky Lotto ticket from under your car seat, the best thing you can do is seek professional advice and support to look at some form of debt consolidation.
Who needs debt consolidation:
Anyone who has multiple debts and is struggling to manage them either logistically or financially could benefit by getting the right advice and taking a sensible look at consolidating their debts. There can be some quite large savings to be had in certain cases. Even if you are unsure, if you have multiple personal debts, your Loan Market adviser will be happy to discuss things and point you in the right direction.
What is debt consolidation:
Debt consolidation is as the name would suggest; assessing and consolidating your debt position with the aim of increasing your control over your debt and lowering your repayments.
It can lower your monthly repayments by combining several loans into a single loan, which often for homeowners is your home loan.
Typically, this will include combining unsecured debts such as personal and car loans, credit card balances, and store card balances into your home loan – which is secured debt – that which is secured by your property at a lower rate.
In other cases, all debt is amalgamated into a single personal loan with one payment and one interest rate, making it more affordable and easier to keep track of.
Here’s 3 main advantages of debt consolidation:
Reduced repayments: What you repay each month on your various personal loans and credit cards might be reduced by bringing all your debt under a single, lower interest rate loan. You can also save on other fees and charges associated with various finance arrangements.
Improved credit rating: By consolidating your debt into one loan, you can improve your credit rating, if you meet your monthly repayments on time. Your credit rating will further improve as you pay off your debt.
Easier to manage: The administrative burden is reduced and you can more easily keep track of what you owe with it all in one place.
What else should you consider:
Every case is different, which is why it always pays to seek out professional advice.
The biggest single issue to take into account with debt consolidation if you are using your mortgage, is that your debt is now ‘secured debt’, so if you don’t pay it back, you risk losing your ‘security’ – your house.
There may be fees and charges associated with setting up your debt consolidation.
And of course, If you don’t cut up your credit cards and exercise some spending control, next festive season you have essentially freed up your credit cards and store credit to accumulate more debt, so be careful!
Talk to us. Loan Market are specialists in debt consolidation and with access to a wide variety of lenders and products we can find the best one for your situation, as well as offer you peace of mind through trusted advice. We can crunch the numbers quickly and let you know what you could save over a quick chat with no obligation.
So if you are struggling a little with your debt this festive season, or simply want to see if we can save you some money on your current repayments, please don’t hesitate to drop us a line and we might be able to take the hard edge off your Christmas shopping.
Want to lean more about how we can help consolidate your debt? Click here.