Avoid the Christmas and New Year Debt Hangover

Today is just eight weeks until Christmas; and nine weeks until 2010.

The Pleasure

The festive season is awesome. There are so many invitations to functions: drinks with each group of friends, your work, your sports clubs and other associations. And with the beautiful warm weather and high spirits it’s hard not to hand over the cash and join in. Then there are gifts, it can be fun shopping, wrapping, giving and receiving.

The Pain

Whilst lots of fun the festive season actually can be one of the biggest creators of financial pain. All the spending burns a hole in your pocket. And when all of your pockets are burned through, most people start wearing out the stripes on their credit card.

Pause for a moment now and take a guess at how much you think you will spend through the festive season, both on gifts and on entertainment.

The Hangover

Then January hits and the debt hangover begins. You’ve spent your savings, and January’s pay packet isn’t enough to repay your credit card. So you pay what you can and incur the interest – often a whopping 15-18 percent. But worse, did you know that on most cards every purchase you make from then will immediately incur interest too? You’ll only get back to using interest free days when you’ve fully repaid a subsequent statement balance in full by the due date.

Ooh, the pain of the good times just keeps lingering. Hand me some paracetamol.

Build Your Fitness

To avoid the New Year debt hangover start early and build your financial fitness. Start now and write a list of everyone you intend to buy a gift for. Then, next to their name write approximately how much you may spend. Divide the total by ten and start saving that amount each week from now.

Yes, that may require you to sacrifice some of your current spending. But if you are going to spend the money anyway, you will need to sacrifice at some stage. If you make the sacrifice after the pleasure, then the pain lasts longer due to you having to pay the credit card interest. So you may as well make the sacrifice up front and minimise the pain.

If you are planning on travelling for the holidays ensure that you include the cost of that in your calculation. And while you are at it, you may as well include an allowance for the parties.

Make It Easier On Yourself

Simply writing a budget for the festive season may be an interesting eye opener. What proportion of our annual income are you supposedly planning to spend during that brief festive season? Would you like to have more to show for the effort?Here’s some suggestions for cutting the pain while maintaining, even increasing the pleasure:

• Among family, friends and work groups suggest that gift giving be operated under the “Secret Santa” method
  o Make some gifts. It doesn’t have to be fancy – I was thrilled one year when a friend in our Secret Santa group made me chocolate balls and shortbread. (They were sooo yummy.)
• Make it fun and creative. Once, in the same Secret Santa group of friends, we had to find the most fun and crazy gift under $5. Perhaps this year I’ll suggest that we do a “hand-me-down” toy – that’ll clean out my garage for me.
• Volunteer to help them do something. Do it before Christmas, take a photo of you in action and include the photo in your hand made Christmas card.
• Have a garage sale of old gifts you don’t use anymore and use the proceeds to fund this year’s gifts.

I’m sure there are plenty of other wonderful ideas.  Please share your ideas in the comments below so we may all benefit.

Merry Christmas!

P.S. I’ve just thought of another idea. You could give people a very valuable but inexpensive gift by telling them about this article

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