Don't suffer a Christmas credit hangover
Christmas is a joyous time for most people, one of laughter, generosity, good cheer and… excess. Invariably, the festive season tends to get overdone in lots of small ways, and big ways too. Too much food, too much wrapping paper, too many late nights, too many lollies for the kids, too much wine for the grown-ups, and too much spending on the credit card.
For many, Christmas can be a stressful time when already full schedules are overloaded with extra social engagements, out of hours shopping trips, cooking, and preparing the house for wave after wave of visitors. This is amplified if the household budget doesn’t run to gift buying and entertaining and the expenses blow out.
The credit card that had your back in December is not your friend come January.
It’s no secret that the longer it takes to pay off a credit card debt, the more expensive it is. The minimum monthly payment keeps the nasty letters at bay but it does next to nothing to reduce the balance owing.
In a perfect world, we would all use our credit card sparingly and pay it off in full during the interest free period each month. All convenience, no cost, right? But this isn’t a perfect world and, often, the credit card is an indispensable tool in the juggling act that a household budget can be.
But when Christmas rolls around, whipping out the credit card to take care of the gift buying, party clothes, eating out, and expensive groceries can turn the festive season sour after the tinsel is packed away.
A dedicated savings account can act as your Christmas fund. Have a set amount of your salary paid into it each week so that, by the year’s end, you will have a healthy balance to pay for guilt-free Christmas cheer. If you are disciplined, and clever enough to have your wages paid into a mortgage offset, leave the extra amount in there to keep your home loan interest payments down but keep track of how much you will be able to allocate to Christmas spending. Come Christmas, spend that amount and no more.
Make the money go as far as possible. Think about buying your Christmas presents throughout the year during sales to make savings and look online to get the best price. If you plan ahead with gift buying you can get some good deals and you eliminate last minute stress.
If you have left it too late to be setting aside a little extra each week, cut back on some big expenses in your weekly budget to leave a little more over in the remaining weeks. The weekly grocery bill is the obvious choice, but there may be extra discretionary spending you can identify and trim until the New Year. You might still need to resort to using credit, but hopefully the damage won’t be as great.
Don’t let Christmas spending spiral out of control, particularly if the household budget is tight. A bit of planning ahead of time should take care of that. After all, it’s not like Christmas sneaks up on you.
It happens at the same time every year.
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