Christmas can be an expensive time of the year and it’s all too easy to spend more than you planned to. Many people start the New Year with bills they are unable to pay and this reality quickly replaces the joy of Christmas with a feeling of worry and regret.
The biggest problem is credit cards. It’s easy to walk into a store with a particular budget in mind only to walk out having spent far more than anticipated. Once bitten by the Christmas bug, spending can get out of control.
Even though people know they are spending too much, many put it into the “worry about it next year” basket. The problem is next year rolls around very quickly, happiness turns into bill shock and the realisation that the only thing they have started the year with is debt they are unable to pay. This is not the making of a happy New Year.
We see a lot of defaults being recorded on people’s credit files due to Christmas spending. This is a great shame as often a tarnished credit file can ruin people’s plans for the year as hopes to secure credit to say buy a house or go on a holiday can become impossible. The ramifications of even a small payment default can be far reaching and effect people for years.
While it is true that if handled correctly many payment defaults can be removed from a credit file, there is little doubt that prevention is the best cure.
Be disciplined, make a list of people you are going to buy for and list how much each item will cost. Add these items up and be honest with yourself, can you afford it? If in any doubt reconsider who you are buying for and what you are buying. Going to the shops with a clear direction of what you want to buy is far more effective than drifting from shop to shop and buying what catches your eye.
At the end of the day Christmas is about being with family and friends, not about who buys the most expensive presents. But what if you do overspend?
Many people make the mistake of going to ground when they owe money. Even though a creditor may be willing to help, they are unable to do so if they can’t talk with the borrower. Most credit providers are bound by strict laws that in many cases require them to help people that are unable to meet their obligations.
Creditors such as the banks are often willing to offer people periods of relief with nil or reduced payments. The critical point is while a person is under an arrangement the creditor is not able to list a payment default on their credit file. Some creditors are able to offer periods of financial relief for up the twelve months and in some cases can even stop interest and fees, so taking the initiative and calling the creditor is the best thing you can do.
I understand why it can be challenging to call a creditor; many people feel embarrassed or worry they will be treated badly. The reality is most creditors respond to people that are experiencing financial problems with dignity and respect and are often as motivated as the borrower to try and reach a favourable outcome.
It’s vital to contact the credit provider if you find yourself unable to honour a debt. Doing so may not only save your credit file but give you that happy New Year after all.
John Dickinson