Christmas and the holiday period in general, is notoriously expensive so we are looking at how you can avoid post-festive debt. Costs can start piling between end of year celebrations and Christmas shopping. Those without enough cash saved will often resort to credit to tide them over. But this can result in a post-festive debt hangover that lingers well into the new year.
Aside from setting a budget, there are several steps Aussies can take to avoid post-festive debt and remain within their means this Christmas.
Set gift expectations with your kids
We all want to spoil the kids over Christmas, but it’s never worth going into debt to pay for presents. Instead, try and gift your kids practical items that they may already need, such as a new school bag, running shoes or texts. This can also help minimise the strain of the back-to-school shop.
If your kids are older, you might want to try giving them a spending limit and allow them to choose their own gifts. Not only can this help you remain within budget, but it also teaches kids a valuable lesson in money management.
Use cash where possible to avoid post-festive debt
It’s easy to lose track of spending if you’re paying on card. There’s no physical exchange of money, which makes transactions less tangible. When Christmas shopping, try withdrawing your allocated funds in cash. This way, you’re more likely to avoid overspending and won’t have to worry about repaying the funds with interest.
Purchase your non-negotiables first
Some Christmas costs might be more essential than others. For instance, you might need to purchase flights or accommodation if you’re visiting relatives, or it might be your turn to purchase the ham or turkey this year.
Once the essentials have been covered, you can then work out how much you have to spend on other items. Think about what you can potentially forgo to save money and avoid post-festive debt. You might want to swap expensive decorations for homemade ones. Or if you’re hosting Christmas lunch, request that all guests bring a plate of food, so you’re not left footing the entire food bill yourself.
Switch to a balance transfer card
If you do end up relying on plastic this Christmas and you know it’ll take you a few months to pay off, it can be worth switching to a balance transfer credit card to minimise your interest. This type of card allows you to transfer your existing card debt and comes with a 0% interest rate for up to 24 months. This can end up saving you a small fortune in the long run.
Open a Christmas savings account for next year
Do yourself a favour for next year and open a Christmas savings account early in 2020. Christmas savings accounts allow you to make deposits all year round, but access to the funds is restricted until the start of the holiday season. This means you won’t be tempted to dip into your savings before then. Gradually building your savings over the course of a year means you can easily have $500-$600 in the bank by the time Christmas arrives.
Schedule an automatic transfer on the day you get paid, so you won’t notice the funds leaving your account and you will avoid post-festive debt next year.
To avoid post-festive debt you don’t need to miss out
Saving money doesn’t mean you can’t have fun over Christmas. Sometimes it’s the simple things that are the most enjoyable – a family picnic, fish and chips on the beach or lounging around the pool.
By sticking to a budget and cutting costs where you can, you should be able to avoid a stocking full of debt in the new year.