Christmas is a favourite time of the year for many, but it can be the cause of additional stress with an increased strain on the budget.
You may have planned a Christmas budget to the cent and come unstuck at the end or maybe you just closed your eyes and hoped for the best! Even the most well organised can underestimate the cost of the Christmas period and start the new year on the back foot trying to recoup after Christmas.
Australian’s really feel the pinch of the Christmas period – the average credit card debt after the holiday season in Australia is $1,666, with 82% of people taking up to 6 months to pay off Christmas credit card debt. A staggering 3% of those with debt following the Christmas period expect never to pay it off at all (Source: Australia’s Christmas Spending, ASIC).
There are ways to get your finances back into shape after the Christmas period. Here are my top tips on recovering after overspending during the Christmas period and how to prepare yourself for 2018.
Tip 1. Declutter the house and debt
Take the opportunity to declutter your household and make some extra cash in the process.
This could be things you no longer use, items that serve you no purpose or gifts that you didn’t really need.
As they say “One man’s trash is another man’s treasure”.
Listing unneeded items on Ebay, Gumtree or Facebook – will free your home of clutter and allow you additional funds to tackle that debt.
Tip 2. Limit luxury spending
If there is any time of the year to limit your spending on luxury items now is the time!
If you can limit your spending on luxury items, it will allow you extra cash to place directly onto the debt.
Additionally, it may also help to set your spending habits for the next 12 months.
Challenge yourself to cut luxury spending for 30 days and you are on your way to creating more positive financial habits for the year. For example, eating out or getting takeaway a couple of times a week could be seen as a luxury that you could reduce.
Tip 3. Automate payments
Contact your bank to automate a set amount each week to be paid onto your credit card debt, ensuring the debt is paid before any other discretionary spending occurs.
Most banks have facilities to set this up via online banking. Additionally, take any extra unexpected funds you might receive.
For example overtime, bonuses and other amounts – pay them directly onto the debt to reduce interest and save you money.
Tip 4. Dont pay full price
If you do need to make purchases in the early part of the year, shop around to see where you can get the best price.
Where possible, don’t pay full price.
Comparing between retailers can save you thousands, and most of the research can be done online.
When in the store, just ask if they can do a better price – it doesn’t hurt to ask and often you will save some money.
Tip 5. Set a plan for 2018
Once you have cleared your debt from 2017, it’s important to set a plan for next Christmas.
Ask yourself, where did I spend the most money? Where did the unexpected costs come from?
It’s now a prime time to set yourself up with a system for savings for Christmas 2018.
It’s only 335 days to go!
By following these tips, like my clients you’ll be able to ensure that when you engage a financial adviser they will be able to help you with what you need.
If you would care to share your experience with me, please comment below!