How to avoid a Christmas debt hangover

Christmas comes but once a year and when it does it brings …… massive temptation to overspend.

We all like to enjoy ourselves at Christmas. But too many of us who are sensible during the rest of the year adopt a live now, pay later attitude over the festive period

Put it on plastic

Research by the Money Advice Service revealed that 37% of Britons paid for last Christmas on credit and then spent the rest of the year trying to pay it off.

Debt help charities always see a surge in pleas for help at this time of the year and say Christmas debt is often made worse by sudden changes in circumstances like an unexpected bill.

Change in circumstances

Sue Anderson of StepChange said: “Among StepChange clients, debt often occurs as a result of a change in circumstances that causes people to lose some or all of their usual income.”

But she offers a series of tips to help people to lessen the impact of the seasonal debt hangover and make January less stressful.

Set a budget and stick to it

It’s all too easy to fall into the ‘generosity trap’, spending money we can’t really afford because we want to treat our loved ones to special presents, food, festive decorations and the whole works.

But think of it a different way – by setting an affordable budget and sticking to it, there’s more chance of being able to afford the little treats that can satisfy our generosity urges for loved ones throughout the year ahead as well, rather than finding the new year has to be all about belt-tightening to pay for the aftermath of Christmas.

Don’t forget the hidden costs

It’s not just the cost of the gifts you have to be aware of. Budgeting for things like the cost of travel to get to wherever you’re going at Christmas, the cost of joining in the work Christmas do, contributions to Christmas activities that children might be involved in at school, or the Secret Santa, are easily overlooked.

Before you know it, you’ve blown your budget. So try to sit down and make a plan of everything you need to factor in – not just the cost of food and presents. If something has to give, then at least you have a chance to think about which area of spending you’re most prepared to cut back on.

Beware of the pressure of ‘putting it on plastic’

Making good memories (or even good presents) doesn’t have to be about spending lots of money. Your friends and family wouldn’t want you to get into difficulty for the sake of buying them stuff.

Think about the consequences of ‘pay later’ or ‘putting it on plastic’. It’s still real money in the end and your children’s home-made Christmas biscuits may be just as welcome (and more fun).

Plan ahead

Though there’s not much time left before the big day you can still plan ahead to help you spread (or even reduce) costs.

If you have a freezer, making food you might otherwise buy can prove cheaper than buying ready-made versions. Looking further ahead, if you start a savings plan from January to save up all year for the following Christmas may mean a borrowing-free Christmas a year from now.

Don’t panic!

If you still end up over-spending, don’t panic and do something about it sooner rather than later.

Go back to basics and make sure you draw up a budget that will get you back on track. The sooner you tackle any debt issue, the better.