Many Brits are facing the dreaded Christmas financial hangover. Here is what you should do!
Christmas is an expensive time of year, and more and more Brits are turning to credit to cover the cost. It’s not until January when the Christmas financial hangover, or should that be reality, really kicks in.
According to uSwitch, nine out of ten Brits have started 2017 relying on their credit cards to see them through – each facing an average debt of around £636. Worse still, 52% of us think that we’ll still be tackling the debt of Christmas 2016 as the tree and decorations go up for 2017.
A very scary thought indeed.
So, what can you do to tackle the debt and make sure you’re not carrying your Christmas financial hangover all the way through to next Christmas?
In this short guide I’ll give you some tips to help tackle the Christmas debt, as well as helping to prepare for next year.
Make a budget
Now, when I say make a budget, this is not to guide you through January.
This is something you, and everyone else, should be implementing every single month.
A budget is not there to restrict you like some sort of strict, unrealistic diet.
It is there to tell your money where to go before your feelings do.
Write down your priority bills – rent/mortgage, food, council tax, gas, electric, water, TV license, Child Maintenance etc.
Once you have worked out how much your priority bills total, subtract it from your income.
When you know what is left, work out how much you can afford to start paying back towards your debt.
Paying the minimum on credit cards is not the way to tackle debt quickly, it never really goes anywhere and the interest charges keep adding up.
If at all possible, you must pay more than the minimum amount.
What if there is nothing left after priority bills?
If there is nothing left after paying priority bills, or worse still, not enough to pay them in the first place then you have a serious problem and you should seek help from a trained debt adviser.
The debt is not going to disappear and you must tackle it before it spirals completely out of control.
I have some money left but it will only cover my other bills
First of all you consider carefully what these other bills are and their importance in the grand scheme of things.
I know a lot of people don’t want to hear it, but your TV subscription is not a necessity and you should look at reducing your package as much as possible if you can.
If you’re paying £100 a month for your TV package and are able to reduce it by half, you’re already saving £600 a year.
Money that could be paying off some of your debt.
Same goes for mobile phones, if you can reduce the price you should look at doing so.
Are you getting full use of that gym membership?
If not, get rid of it. It’s wasting money you could be using to make your financial outlook a lot healthier.
Change spending habits
Look at other areas you can cut down spending.
When you’re out shopping, swap to some cheaper brands.
If you’re shopping at Sainsburys, look at using discount retailers such as Aldi and Lidl too.
I can tell you from experience their own brands are really top quality and cost a fraction of some of the more well known brands.
Shop using price-per-unit
Just because it says BOGOF, 50% extra or comes part of a multi-pack, it doesn’t mean that you’re getting the best deal.
Retailers want your money and are experts at tricking us into believing we have got ourselves a bargain.
Any money you save can go towards paying off some of your debt.
Reducing it as quickly as possible should be your main focus.
The average household in Britain throws away £470 worth of edible food a year, rising to £700 for a family with children – the equivalent of £60 per month!
Making a meal plan not only saves you time, it saves you money.
Plan meals using similar ingredients to make sure nothing goes to waste.
Use leftovers for lunches the next day and remember the freezer is your best friend if you batch cook.
Any bits of veg you find leftover can be used to make some nice homemade soup.
A meal plan helps you to think smarter in the kitchen, meaning your more likely to run your kitchen like a Head Chef and not waste a thing.
Stop playing lotto
The average Brit spends £416 per year playing the Lotto.
That’s an awful lot of money when you consider your odds of winning.
If your credit card bill is £1,000, can you really afford to be playing it?
If you spend like the average Brit, or more on the Lotto, even giving it up for a year could make a serious dent in your outstanding debt.
Make you own lunch
The average Brit spends £860 on lunches at work.
We all know that could be done for a fraction of the price if done at home.
Get into the habit of preparing your lunch the night before so you’re not rushing around in the morning.
Or, as mentioned above, use leftovers from the prevous night’s evening meal.
Cut out coffees/Tea
The average Brit spends around £487 a year on take away coffee/tea.
If there are bills that need paying this should be one of the first things you cut out.
It’s all money that could be going towards paying back your debt and making things easier for yourself financially.
If you fall into all, or any of the categories above you CAN save money that can be used to pay off some of your debts.
The Christmas financial hangover affects many people in the UK, you’re not alone.
Once you have started to tackle it, start thinking about preparing for next year by putting a bit away each month so next year you’re not so heavily reliant on credit.
If none of the above applies to you and you have way too much month at the end of your money, it’s time to seek help.
Burying your head will only make your Christmas financial hangover worse, tackling your debt early gives you the best chance of climbing out of it quicker.
Have you ever got to New Year with a Christmas financial hangover? Do you have any tips to help get through it? We’d love to hear your thoughts, please leave comments below!