Top ten tips to avoid getting into debt this Christmas.

christmas debt

Christmas is an expensive time of year as the cost of presents, decorations, meals out and entertaining all add up. Individuals intend to spend £567 each at Christmas, with 46% planning to pay for it using credit cards, store cards and overdrafts.

It is always better to avoid getting in debt for Christmas, so WEALTH at work has created their top ten tips on how to avoid debt this festive season and to help people get a good start to their finances in 2020.

  1. Plan your budget – Individuals should check their bank statements and make a list of what they are spending each month. This will highlight where their money is going and where savings could be made which could be put aside to help pay for Christmas. Visit the Money Advice Service ‘Budget Planner’ to plan your 2019 Christmas budget.
  2. Agree a price limit with friends and family – It is easy to get carried away at Christmas and spend more than you can afford. It is really worth suggesting alternatives which other members of the family might actually be grateful for. Many families agree limits on the amount to be spent on each other in advance, with some agreeing to only buy gifts for the children, making gifts, or choosing to have a ‘day out’ as a family as an alternative.
  3. Buy early – Many shops have some great offers in the months before Christmas, with 3 for 2 and half price deals on toys and gifts, but most of these are gone by December. With a bit of careful planning, it is possible to save a lot of money by using these offers, and also means that there is less spending in December. However, always check that these offers are genuine savings.
  4. Shop around for food and drink – The Christmas food and drink shop has to be the most expensive shop of the year, so make sure that you shop around. There as some great deals to be had. Some supermarket own brands have been getting rave reviews and are a fraction of the price of the leading brands.
  5. Look for discounts – If you are buying something expensive, or are buying lots of things from the same place, it is worth asking for a discount. You may even find discount codes for online purchases. It’s worth checking if your workplace offers a discount scheme, as you could get a range of discounts on travel, high street vouchers, gift cards, cinema tickets, days out and leisure activities that you may want to purchase as a gift for someone.
  6. Check interest free deals – Some companies and credit cards offer 0% interest finance deals, where you pay for a product over a period of time.  Although strictly speaking it is still a form of debt, incentives like these can be attractive when buying gifts for Christmas, but make sure you have paid off the debt before the deal ends, to avoid high rates of interest.
  7. Beware of pay day loan companies – If you really do need to borrow money this Christmas, it is best to avoid pay day loans as they are a very expensive way to borrow. They are only meant to be short term loans, so don’t touch them unless you are sure you can pay them back on time, as the interest can spiral out of control. If you have already taken a high interest loan like this speak to the Citizens Advice Bureau to find out what options are available to you.
  8. Plan to pay off debt as soon as you can – If you do find yourself getting into debt, make sure you pay if off as soon as you can. For example, according to Money Advice Service if you borrow £2,000 on a 19% APR and only pay the minimum payment every month, it will take you 24 years and 2 months to repay it and you’ll pay back £4,731 in total. The total interest you would have to repay will be a shocking £2,731! A good option could be to consolidate any debts into a 0% or low interest balance transfer card, as more money will go towards paying the debt off and enable you to clear it over a shorter time period. Whatever method you chose, it’s always best to make paying off your debt a priority.
  9. Look for ways to save money – Price comparison websites will help you compare the different deals for a range of household bills, from utilities to car and home insurance and the savings can be significant. For example, the average household can save £300 per year by switching gas and electricity provider. Every penny saved can be put aside for Christmas 2020!
  10. Plan early for next Christmas – After Christmas there are often some great deals on things you know you are going to need for Christmas 2020. Keep an eye out for special offers and store them away for next year, but make sure you remember you have them!

Jonathan Watts-Lay, Director, WEALTH at work, comments;  “Christmas is supposed to be a time of year to look forward to and enjoy spending time with family and friends, not worrying about money. If you are going to struggle to afford Christmas this year, why not suggest to friends and family that 2019 is a less expensive Christmas, and suggest a price limit on gifts, or creative alternatives such as family days out? They may also be struggling and actually be relieved. If you are facing money worries, always remember you can contact free services such as Money Advice Service, the Citizen’s Advice Bureau or National Debt Line.”

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*WEALTH at work and my wealth are trading names of Wealth at Work Limited which is a member of the Wealth at Work group of companies.