What can I do to avoid Christmas debt?
05/01/2009
Christmas is traditionally a happy time – a time spent eating, drinking and being merry with friends and family. However, for many British households, the weeks and months afterwards are spent worrying about debt.
Increasing numbers of British citizens are relying on credit to fund the festive season. According to CreditExpert, almost one in five households will rely on credit cards this year, and intend to repay the balance later. Others will rely on their overdrafts and personal loans for that extra financial boost.
Paying with credit is fine in moderation, but problems can occur if that spending goes too far. This year, a study by Savebuckets.com showed that only 29% fully paid off their 2007 festive debts in January, while 24% were still repaying the debt in November.
It doesn’t have to be this way – and here we take a look at how you can reduce your debt worries this Christmas.
Try not to get into debt!
It sounds so simple, but it’s true: by avoiding getting into debt in the first place, you can ensure a hassle-free New Year. Easier said than done? Not necessarily.
Saving up beforehand – even if it’s only a small proportion of your overall spending – can make a big difference to your finances.
Let’s assume you’ve set a £200 budget for your Christmas shopping. By saving £50 a month from October and November’s pay packets, you have automatically halved your debt. If you wanted to spread the cost even more, saving £18 per month between January and November would give you the same budget.
It’s well worth making a plan to help you avoid getting into debt. Take a look at how much you will be spending, and how much of that any savings will cover, and then plan how you intend to repay the remaining debt. Try to keep your repayment period short: if it takes you any more than two months, it’s a sign that you should probably reconsider the amount you’re spending.
What if I do end up in debt?
It’s inevitable that some of us will end up overspending and wondering how we are going to repay the debt. Thankfully, there are a few debt solutions that can help to make the debt management process a little bit easier.
The first thing to do if you find yourself in trouble with your debts is to speak to your creditors and explain the situation. In many cases, your creditors will be willing to take lower payments for a short period of time in order for you to catch up.
If you still find yourself struggling, then it’s time to seek professional debt advice. A debt adviser will be able to explain all the options available to you, as well as offering guidance on a range of debt solutions such as debt consolidation loans, debt management plans and IVAs (Individual Voluntary Arrangements).
For more information, call Debt Advisers Direct free on 0800 074 8639.
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