A local expert from Citizen’s Advice provides timely tips. This Month: How to avoid a nasty January bill fest.
Christmas is a time of giving, but you don’t want to give yourself a headache in the New Year with bills and debts you can’t afford. It’s all too easy to overspend – but you must decide how much you can afford before you start spending. Planning, budgeting and organisation are key to avoid getting into debt. If your spending runs out of control at Christmas, debt can easily become a way of life. If you do get into difficulties, get advice
as soon as you can from your local Citizens Advice Bureau (0800 144 8848) or from another free confidential debt advisory service such as Stepchange or National Debtline.
Here are our top tips for avoiding a Christmas debt hangover:
- Plan early for Christmas. Be realistic and budget accordingly. Manage expectations as to what you or Santa can give and try to resist pressure to spend more than you can afford. You won’t enjoy the day if you are worrying about how much you owe.
- Work out how much you are going to spend on each person and stick to it. Agree with family in advance limits on the amount to be spent on each other; some only buy gifts for the children, make gifts, or choose a ‘family day out’ instead of buying expensive presents.
- Don’t forget the everyday bills; rent, mortgage, utilities, food and other existing debts still have to be paid – and the consequences can be severe if you slip behind. It’s Christmas, but get your priorities right.
- If you do need more money, don’t just run up an overdraft without talking to your bank first – it will work out much more expensive. Try to avoid taking out a short-term pay day loan – the interest rates can be extortionate.
- Keep things simple. If you can afford to pay for your goods outright by cash, cheque, or debit card, don’t be persuaded to take out credit agreements unless they really do work out cheaper
- Shop around to find the best price. Buy what you want and not what other people say you need.
- Be wary of extended warranties. The cost of a repair could be less than the cost of the warranty.
- Buy safe to be safe. Whatever the deal, whatever the temptation, don’t buy from unauthorised traders and don’t borrow from unauthorised lenders. Take care with internet purchases, especially from online market places.
- Read the small print. Check for hidden extras in any credit agreement. Work out the total amount payable. Ensure that the monthly instalments are within your budget before signing. Interest free credit can seem attractive, but if you don’t pay on time, or miss a payment, you could have to pay a lot more.
- Do your own credit checks. If you are going to use a credit card, shop around and compare terms. Some cards charge high interest rates, but provide interest free periods or discounts. Budget for all these costs and put the payment dates in your diary
- Be organised. There’s a loto remember at Christmas. If you’ve borrowed money don’t forget that it won’t be long before you have to make a payment. Make sure you pay on time, even if it is only the minimum, or you will be faced with additional charges.
- Start planning and saving for next Christmas. Once Christmas is over, it’s worth looking at what you did well and what you didn’t. Learn from your mistakes and start planning how you will do things differently next year. This might also be a good time to start saving for next Christmas.