Debt isn’t a welcome guest for any family at Christmas time. And yet blowing the budget and paying it all back next year is tempting when we’re trying to make it the best festive season ever. Get tips on how to keep your finances in the best of shape as you get ready for Christmas so you can enjoy a debt and stress-free new year.

The festive debt hangover

Getting into debt at Christmas is becoming about as common in Australia as feasting on prawns, turkey and ham. And it’s not hard to see why as spending goes into overdrive in the days leading up to 25 December. In 2016, the National Retail Association was expecting sales of more than $48 billion in the period from mid-November to 31 December. That’s more than $1 billion spent every single day.

So if you get a little carried away with shopping for the biggest celebration of the year, you’re in good company. But this spending frenzy can have big consequences for months to come. According to survey data gathered by finder.com, families are taking months to get over their festive debt hangover. On average, a family took until 10 March 2018 to clear their 2017 Christmas debt and one in six people took between four and six months to catch up.  

What you can do about it

If you’re finding yourself facing credit card balances and other debts in January and beyond, it might be time to save yourself hundreds of dollars in interest by curbing those holiday season spending urges. Here are five great ways to make budgeting work for you when the pressure is on to spend:

1.Stick to cash – when we wave our card at an etfpos terminal, it’s easy to be blasé about the amount we’re actually handing over. And if that card is credit rather than debit, you’re spending big with dollars you may not actually have in the bank. BBC broadcaster and psychologist Claudia Hammond suggests using cash for your Christmas purchases for a more conscious approach to spending. “When you are about to buy something on a credit card, imagine taking the equivalent money out of a cash machine” she says. “Would you still want to spend it?”

And if you’re buying online and using your card to make this happen, try to avoid storing your credit card details or using one-click features in shopping carts. This will give you more time to think about what you’re buying, why and for how much. And try not to be tempted to buy just a few more gifts with Afterpay. If you find yourself unable to make repayments on time, you’ll be struggling even more when late fees are added to your balance.

2.Start with the essentials.. – if you’re going to rein in your spending, that doesn’t have to mean giving up on the Christmas treats and traditions you enjoy most. Make a budget for anything you and your family consider to be essential to make Christmas special for you. Maybe that’s a real tree, decorating gingerbread houses or pavlova for dessert. This will give you a baseline amount to allow for in your budget. So when it’s a choice between baubles for the tree or fairy lights for the verandah, you’ll know which one is more important and can spend accordingly.

3.But don’t forget the extras – having said that, there are lots of small details in preparing for Christmas that can sabotage your best budgeting efforts. Things like gift wrap and postage for overseas presents are small costs that can mount up. So remember to allow for these when planning how much you’ll spend altogether.

4.Have a Christmas cut-off – the final days before Christmas can be the time when your budget flies out the window. From their survey, finder have also learnt that almost half the amount we each spend at Christmas is handed over during the five day count-down to the 25 December. To save you from making expensive or unnecessary panic purchases, stick to a deadline of 20 December to have your shopping all done and dusted.

5.Share the catering load – in their Christmas forecast for 2018, finder are expecting Aussies to spend $122 per person on food and $131 on alcohol. In your family, you may be footing the bill for many Christmas guests this year. If your catering spend is threatening to push you over what you can actually afford, ask relatives and friends to make a contribution. You could suggest they bring a dish, something to drink, or pay a share of the grocery bill.

Money & Life, FPA