Occasionally life will throw you a curveball that directly or indirectly impacts your finances: you’re made redundant, your furnace dies or you’re expecting a child and you realise you’ll need to upgrade homes in the not-too-distant future.

The last thing you want is to dig yourself into a deeper hole because you weren’t able to manage the financial side of things.

Here are some ways to avoid that, so that you can bounce back sooner rather than later.

1.  Put your spending on lockdown.

The first thing to do is to stop spending more than is necessary. Some of the easiest ways to do that without disrupting your lifestyle too much include:

• Cancelling any unnecessary subscriptions. With so many online providers charging a subscription fee these days, there are bound to be some you can cancel or temporarily shut off. Keep the Netflix subscription if you love movies or the Spotify subscription if you love music, but nix the rest if you can.
• Cutting back on the luxuries. Temporarily swapping a movie night in for a night at the cinema or swapping organic groceries for the non-organic kind can save you some money without disrupting your lifestyle too much.

2.  Review your budget (or create one for the first time).

We’re big proponents of creating a budget so if you haven’t created one yet, now’s the time to get onto it.

Even if you already have a budget in place, now’s a good time to revisit it.

If there’s anything this situation can teach you, it’s that your financial situation doesn’t stay the same forever. Pull your budget back out for a re-review and see if there is anywhere else you can cut back.

3.  Check your financial institutions’ financial hardships policies.

If you’re having a hard time making ends meet even after tightening your belt, you may want to reach out to your bank, lenders, utility companies and anyone else you owe money to.

They’ll often have financial hardship policies that will temporarily halt your payments or reduce them, so that you can continue to meet your obligations and avoid late fees and defaults. After all, the last thing you want to do is make a difficult situation worse by going even deeper into unnecessary debt.

4.  Cash out your rewards points.

If you have any rewards programs like frequent flyer points or credit card rewards , you may have the option to convert your points to cash or use them like cash toward your next credit card payment.

Using points for cash usually doesn’t go as far as using them toward merchandise or flights, but it may be worth it if you need to “buy” yourself another month or two.

5.  Make minimum payments where it makes sense.

When life throws you a financial curveball, it often makes sense to hang onto as much cash as possible so that you can pay any additional unexpected bills that crop up. For example, if your best friend (aka, your dog) has emergency surgery, you’ll probably want some cash handy for any unexpected prescriptions during the recovery phase.

That means it might make sense to reduce loan payments to the minimum due so that you don’t find yourself back to square one when yet another bill comes knocking.

6. Get help

If you find that your financial situation is more than you can handle alone, there are various not-for-profit organisations that can help wherever you are in New Zealand. These include FinCap and the Citizen’s Advice Bureau.

Stay strong

We all experience situations that test our finances at one time or another – often multiple times throughout our lives. The key is to take strong action to keep the financial hit from spiraling out of control.

And if you do find that such situations test your mettle a little too much, it’s never too late to start thinking about a curveball account (perhaps better known as an emergency fund). This is a savings account specifically set up to help you through times like this.

That way next time, it’ll be just that little bit easier.

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

As we approach the silly season and our bank accounts begin to bear the brunt of it, Kiwis should aim to be careful shoppers and only spend what they can afford.

We commissioned research which reveals nearly one in three New Zealanders put their Christmas and holiday spending on their credit card and are potentially facing a New Year hangover, saying they won’t pay the full bill before the due date (29%).

CreditSimple.co.nz spokesperson Hazel Phillips said the holiday season was a time for celebrating, but people needed to remember their limits.

“Christmas is a tough time to strike a balance between excitement and practicality,” Ms Phillips said. “When spirits are high, we tend to throw our budget out the window and an attitude of ‘she’ll be right’ can creep in. It’s a good idea to set a budget for your Christmas spending, which will help you avoid a New Year financial hangover that could wreak havoc on your credit score.”

Additional CreditSimple.co.nz analysis** into the average late payment rate over the past two years shows New Zealanders start falling behind in paying off their credit cards in October. By the time Christmas comes around they are already in the red, with the late payment rate peaking in the first quarter of the new year.

Although credit card spending is a concern, the research indicated that Kiwi spending wasn’t all doom and gloom. Most New Zealanders are likely to use EFTPOS rather than credit for their Christmas and holiday spending (55%), and a surprisingly high 38% say they’ll use cash – nearly the same number who say they’ll use a credit card (39%).

“Cash and EFTPOS are a great way to ensure you are only spending money that’s already in the bank,” Ms Phillips said. “But people still need to make sure that their holiday spending isn’t being pulled from money that should go to bills, and putting essential expenses on the back burner.

“Late or missed payments will damage your credit score and could prevent you from getting credit again – often just when you really want it. It’s crucial to keep your holiday fund separate and make a plan to pay bills on time to keep your credit score healthy.”     

Top tips to avoid the Christmas spending hangover

￫ Put your accounts on automatic to ensure bills are still being paid while you are away

￫ Keeping track of your festive spending is the best way to avoid going over your budget this Christmas. 

￫ Have a separate holiday account to avoid spending more than you can afford

￫ Check your credit score and make sure you don’t have any outstanding payments that could come to haunt you in the New Year

￫ Shop around for a better deal on interest
Chances are you could be getting a better deal on any loans, credit cards, mortgages and even utilities, you just need to shop around. If you’ve been paying your bills on time and have a good credit score, credit providers will be eager to give you a handsome deal since you’re a good risk. Negotiate with your bank and current phone, power, insurance and internet providers to see if they can offer you better rates, and see what their competitors would be willing to offer you, too. You might be surprised at how much you could save in the long run in fees and interest. (Check out our offers by getting your credit score right here on Credit Simple.)

*The research was conducted by Perceptive Research in November 2017 surveying a minimum of 1,000 New Zealanders online using nationwide sampling framework, the results are then weighted to Statistics New Zealand census gender, age and location data.

**Drawn from data held by illion. Credit Simple is part of a group of companies which includes illion New Zealand Limited, a leading credit bureau in New Zealand. Credit Simple operates entirely separately from illion and has complete independence.