Lots of us start the Christmas season with the best of intentions, but it’s easy to get carried away, leaving ourselves with a debt ‘hangover’ that can be felt well into the New Year.
The Office of Fair Trading frequently sees people with mounting debts, sometimes adding the cost of Christmas on to the debts they are still dealing with from the previous year.
As the countdown to December 25 starts, the OFT has issued 12 Christmas tips for budgeting, to try to reduce the financial stress of Christmas.
Tip one – Make a budget
Be realistic and budget accordingly.
Work out how much you are going to spend on each person and stick to it.
Work out what money is needed for extra food and going out.
Total it all up and this is your Christmas budget.
Tip two – Don’t forget everyday life amidst all the hype
Christmas is a special time of year, but it is important to remember it is just one day.
Don’t forget rent, mortgage, utilities and the other bills you have to be pay regularly.
These are priorities and the consequences can be harsh if they’re not paid.
Tip three – Affordability, not desirability
Remember that most people appreciate the gesture and thought that goes into a gift rather than how much it cost.
Many people agree to buy each other inexpensive, ‘jokey’ or consumable gifts, or have a ‘presents for the kids only’ agreement.
These techniques can be useful to keep Christmas manageable and can also be a relief for other people, if it makes their shopping list shorter!
Tip four – Say what you want
Present giving (often) works two ways, so can be a great way of getting things you actually need.
Writing a present list isn’t just for kids and it is worth having a good think about it beforehand.
Tip five - Flog it to help with Christmas cash
Before you decorate your home for Christmas, have a clear out.
Are there unused, unwanted clothes or other items lying about that you don’t need?
There are several local social media pages, websites and webpages which can be used to sell items online.
Tip six - Small sacrifices can boost your budget and your health
Think about what extra savings you can make.
Consider walking to work if it’s possible or simply reduce the number of takeaway coffees during the day and take something from home for lunch.
Small savings every day will add up and improve your budget (and maybe also your waistline) before Christmas!
Tip seven - Shop around
Try as many different places as possible to find the best price when buying for others or yourself, but be very wary of buying ‘too good to be true’ deals from uncontrolled sellers online.
Tip eight – Be careful with credit
If you are going to use a credit card, shop around and compare terms.
Some cards charge high interest rates, but provide interest-free periods or discounts.
Budget for all these costs and put the payment dates in your diary to make sure you pay on time (even if it’s only the minimum), or you will be faced with additional charges.
Avoid an overdraft – it could be a costly way of borrowing money, if it’s not agreed with the bank.
Tip nine – Don’t throw away receipts
Keep the receipts for goods you have bought.
You will need these if it turns out that there are any problems with your purchases.
Also, many stores have post-Christmas sales and without a receipt you could find that you will only be reimbursed the sale price rather than the full price paid before Christmas.
Tip 10 – Returning unwanted gifts
Unfortunately, you have no contract with the retailer – the person who bought you the gift does.
This means that you cannot insist that the shop accepts goods back merely because they are unwanted.
Shops are under no legal obligation to receive the goods but may have a policy about returning unwanted items, which fortunately many do.
Some retailers will offer credit notes or an exchange, if the goods are returned in perfect condition and if proof of purchase can be provided.
Tip 11 - Start planning and saving for next Christmas
Once Christmas is over, it’s a good time to start saving for the next one.
Work out how much you have spent and divide it by 10. Start saving this amount in February.
Then you should have enough saved up by November.
Open a savings account to help you to keep your savings separate from your regular income.
This gives you less temptation to spend and can earn you interest at the same time.
Tip 12- Don’t Panic
If you find yourself in a situation where money and debt is a worry, tackling problems early is always the best way to resolve them.
Debt counsellors at the Office of Fair Trading help people every day from all walks of life and can offer support and guidance.
They can be contacted for confidential advice and support on 686510.
Online debt management information can also be accessed on the Office of Fair Trading’s website https://www.gov.im/oft/money/debt_counselling.xml