5 ways to avoid the Christmas debt trap

I don’t want to be the ghost of Christmas present, but debt is scary. Trying to pay off our 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, 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 st (sometimes a girl just has to have multiple glasses of prosecco whilst 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 outcredit card.

Make a list of everyone you would like to buy for – then check it twice! Decide 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).