Written by: Cally Worden
Those Christmas marketing magicians know how to tickle our festive fancy and before we know it, our seasonal ‘must have’ list is as long as your arm. Everything from flashy lights and table decorations to personalised Santa sacks and Christmas jumpers becomes an essential. But stop and think – when the credit card statement hits your mat in early January are you really going to gasp at the balance and think ‘Yeah, but those comedy reindeer antlers made all the difference to the Big Day’? Probably not, right? So are all these Christmas niceties worth getting into debt for?
Stats from the Money Advice Service suggest that around a million UK adults will turn to a payday loan to help out with the cost of Christmas, and more than a third will give the plastic an airing in the run-up to the 25th. We all know that credit and loans have their place … provided you can pay them off quickly. If not, then the debt can quickly escalate out of control.
Where Christmas spending is concerned, it’s as if our good-financial-sense chip is short-circuited when the Christmas lights get turned on. To prevent debts building up, with every online and high street purchasing, try to get into the habit of challenging your spending urge and reminding yourself of your budget. Dull I know, but you’ll thank yourself in January.
Beware the Credit Traps
Payday loans are the main culprits here because their interest rates are so ridiculously high. If you doubt your ability to repay one of these loans then try to avoid them. With credit cards you will also pay a significant amount of interest, but this often only starts accruing after around 56 days. This gives you a little breathing space, but keep an eye on your pay dates or your may end up with a nasty surprise on your next bill. If you simply must borrow in some form then do your homework. Pre-arranged or Interest free overdraft facilities, 0% credit card balance transfers and a good old-fashioned bank loan, can all work out much cheaper for you in the long-run.
What you Can Do
Being proactive about managing your Christmas budget will help you to keep costs under control. The following suggestions may take some of the spontaneous fun out of your Christmas shopping, but will be one in the eye for the advertisers, who have no qualms about sucking you into their perfect Christmas fantasy:
- Make a budget – and stick to it. We run a separate bank account for Christmas that we divert some savings into every month. This helps spread the costs through the year and as the Big Day approaches and the present planning and purchasing begins, we have a strict rule – when the account is empty we stop buying. Simple. An effective way to help you focus on not exceeding your budget for each gift as you shop
- Cull your present list and limit buying to small gifts for children only – you may worry about offending family and friends. Don’t. If they really care for you they will understand, and I’m willing to bet that in 90% of cases they will be relieved at not having to reciprocate with gifts they can ill afford themselves
- Bring Secret Santa into your family – instead of everyone buying a gift for everyone else, draw lots and have each person buy one gift for one other. That way everyone gets a present and everyone saves money
- Make your own Gifts – edible treats, handmade crafts and personal drawings or paintings make delightful personal presents and are almost invariably cheaper, and of more intrinsic value because they contain that magic combination of thought, time, care and love
- Share the food bill – if you are hosting Christmas this year then don’t be afraid to ask for some help with costs. We’d all love to lavish our loved ones with free food and drink, but stumping up for a feast for the extended family can severely dent your finances. Ask each family member to chuck a tenner in the pot to help fund the festivities. Most won’t mind at all and if they do, be sure to sneak an sprout onto their plate beneath the pigs in blankets
The message here is to be sensible. Before you yawn and flip over to Amazon, take 3 seconds to stop and think about your expenditure this Christmas. Those tiny blocks of time may be just enough to switch your financial-sense chip back on and save you from having to make debt reduction your principal New Year’s Resolution.