I don’t want to be the ghost of Christmas, but debt is scary.
Trying to pay off your university fees, fund your business or save for that house deposit is hard enough, the last thing you need is more financial demands on your plate.
Then, when you least expect it, wrapping paper sneaks its way onto the supermarket shelves and Christmas music starts playing in the shopping centre.
You suddenly remember all the people in your life that you want to spoil. That’s the point of Christmas gifts, isn’t it?
Last year (2018), Australians collectively racked up $29 billion dollars’ worth of credit card debt in the lead up to Christmas. In England, the average time it takes to pay off Christmas debt is five months and one in ten people will still be paying off Christmas 2017 during this year’s festive season.
Across the pond, 39.4 million Americans are still paying off their Christmas credit card bills from 2017 – a trend eerily similar to the those that preceded the 2009 financial crisis.
We all know it’s better to give than it is to receive, but what happens when you give more than your bank account can handle?
Excessive spending during the festive season can lead to what’s known as a ‘financial hangover’ come January. I won’t beat myself up for having a conventional hangover on January 1 (sometimes a girl just has to have multiple glasses of prosecco while wearing a novelty NYE2019 headband) but I’ll be kicking myself if I’m sporting a financial hangover when the clock strikes midnight.
So, these are the rules I’ll be sticking to this December to avoid Christmas debt trap.
5 budgeting tips to avoid the Christmas debt trap
1. Be like Santa
Santa is an organised guy. He has to conduct a global assessment of who has been naughty and who has been nice, and then he’s got to deliver toys to the children of the world in 24 hours. If he left all the presents to the last minute, he’d never get it done in time.
Like Santa, I start brainstorming gift ideas and stockpiling presents around August. It may seem extreme, but it makes good financial sense. You get paid either weekly or monthly, so why try and shop for everyone using only your December wages? You’ll end up with unpaid bills or a maxed-out credit card.
Make a list of everyone you would like to buy for – then check it twice! Create a budget by deciding how much you are willing to spend on each person and stick to that amount. I’m not saying you necessarily have to spend $10 on each person. If you want to spend $100 on each person, you go right ahead and do it! But do it in a way that means you’re not exclusively eating two-minute noodles come January.
Space your shopping out over a few months and a few separate pay cheques. You’ll be on Santa’s Nice List for sure.
2. Use online shopping to your advantage
Online shopping can be a huge temptation, and I speak from experience. However, you can use it to your advantage around Christmas time.
Shopping centres and department stores are designed to persuade the consumer to spend money. Sale signs are often in red to give you a sense of urgency, the priciest items are always at eye-level, essentials are always at the back of the store, so you have to walk past loads of other merchandise. Plus, retail staff are required to upsell so that their store can hit targets (no shade to retail workers whatsoever, I’m an ex-Lushie myself).
When you shop online, you can do so at your own pace. You can usually add things to a favourites list, or at least bookmark them, and come back to them later. You can add stuff to your cart without actually checking out. Sometimes you can find discount codes for certain stores just by googling them – this can be a bit hit and miss, but it’s always worth a shot.
I like to add a bunch of stuff to my cart and then think about it for a few days. This method helps weed out what is a good gift, and what is just an impulse buy.
3. Ask ‘What do you actually need?’
Martin Lewis, the founder of MoneySavingExpert.com and presenter on The Martin Lewis Money Show, talks about how we can mis-prioritise other people’s finances when giving Christmas gifts.
In an episode that touched people’s hearts and reduced their guilt over not having much money to spend, Martin illustrated how buying someone a $20 scarf is useless if that person needs to buy school shoes for their children. All that happens is they now feel they need to spend $20 on a gift to give in return.
“Sometimes, the best gift is releasing others from the obligation of having to give to you,” he said.
Don’t go buying your friends and family luxurious gifts until you’ve asked them what they need. Plus, if you know they don’t have as much cash to splash as you, an expensive present could end up making them feel sad or compelled to spend money on you.
Alternatively, organise a Secret Santa among your family. The pressure gets taken right off because everyone only needs to buy one present.
You can also decide to give to charity instead of giving gifts to one another. If you already have everything you need, why not think of others who have nothing?
4. Pay upfront
Make a rule that you’ll pay for everything then and there. No Afterpay, no credit card, no personal loans.
If you don’t have the money at the time, that’s fine. You’re not a bad friend or sibling because you’re not a cashed-up millionaire.
Remember that social media is everyone’s highlight reel. People may upload pictures of all their Christmas purchases, but you don’t know what’s really going on in their life.
You shouldn’t have to break the bank just because you feel guilty during the holidays. Don’t apologise for living within your means.
5. Embrace the group present
If you have your eye on something a bit expensive for a relative or friend, turn in into a group present. Everyone only needs to put in a fraction of the money, and your loved one still ends up with a fantastic gift.
Christmas is a time for giving, but that doesn’t mean you should be under financial strain. Buying gifts responsibly doesn’t make you The Grinch. It means you’ll be starting the new year debt-free.
This article was originally published by A Girl In Progress.