Christmas really can be the most wonderful time of year. It encourages people to take time out of their busy schedules in order to spend quality time with their family and friends. It brings out the best in people. Another fun aspects of the season is the tradition of gift-giving. The tradition dates right back to the origins story of Christmas where three wise men supposedly brought gold, frankincense and myrrh as gifts for the baby Jesus. Nowadays, people gift their nearest and dearest with gifts that bring a smile to their faces. However, the pressure is on when it comes to festive gift giving. Every year people seem to be trying to purchase more and more lavish gifts as symbols of their affection, however, this can prove problematic, as people seem to be spending beyond their means and digging themselves into debt as part of this process. Let’s take a moment to understand the extent of debt that people tend to get themselves into, the problems that can come hand in hand with this, and a few different pieces of advice that can help to minimise the issues that can come as a direct result of borrowing!
It is estimated that British consumers alone spend over eleven billion pounds on their credit cards over Christmas to fund their festive spending. This spreads out to the average Brit entering the new year with an average of £636 of debt on credit cards. Surveys have found that over fifty percent of consumers haven’t finished clearing the last Christmas’ debt by the time the next Christmas comes around.
Problems With Debt
Debt can have numerous negative effects on our overall health and wellbeing. It’s important to acknowledge the bad consequences of debt in order to spur ourselves on to change the impact that debt can have on our overall quality of life! One of the most detrimental effects of debt is stress. Stress occurs, as we have to struggle and go without in order to pay our debts and the added interest off. Common effects of stress on the body include:
- Sleep problems
- Chest Pain
- Muscle tension
- Stomach Upset
Negative effects of stress on your general mood include:
- Lack of motivation
Effects of stress could lead to:
- Undereating or overeating
- Social withdrawal
- Emotional outbursts
In order to avoid all of these negative consequences spreading through our personal lives, we should aim to actively reduce our stress levels as effectively as possible. Now, many of us exist with personal debt on a regular basis. But the stress of added debt over Christmas can exacerbate all of these issues.
Dealing With Existing Debt
If you have existing debt from previous years, it’s important that you start to tackle this in the lead up to Christmas. Clearing it now will give you a clear head and a clean slate when it comes to making this year’s purchases. The majority of us amble our way through clearing debt. We stick to minimum payments required on credit cards, and simply hope that one day we will clear them. But if you want to reduce your debt quickly, you need to make a more thorough and dedicated plan. Use a credit card payoff calculator. This will total up how much you owe out and will be able to let you know how long it will take to clear all of your debt depending on the size of payments that you make on a monthly basis. This will give you a more certain idea of when you will be debt free, giving you a goal and something to look forward to.
Taking On New Debt
While it’s all well and good to say that you shouldn’t take any new debt on, we are well aware that the majority of people will go against their best interests and take out loans or apply for new credit cards regardless of whether it will help them in the long run or not. People still want to gift their loved ones and will argue that the stress of not gifting is equal to, if not worse, than the stress that comes hand in hand with debts accrued through gifting. If this is the attitude that you are going to take, the least that you can do is to take out the best loans, credit cards, or other financial deals available to you. So many people make the mistake of giving in to the sense of urgency that surrounds the festive period and will take out whichever loan presents itself to them first. The problem with this is that loans that are extremely accessible tend to come hand in hand with extremely high interest rates. These types of loan can be extremely difficult to keep up with and you can quickly find yourself spiralling into irrecoverable debt. Instead, take time to browse the market. Lending is a competitive field and many professional lenders will compete with one another in order to offer you a deal that will encourage you to borrow from them rather than someone else. If you have a low credit rating, not to worry. You could consider Guarantor loans. This is likely to have a lower interest rate than you may find attached to other loans that you may be offered with a poor credit score, but the lender will feel confident offering money to you, as you will have a guarantor to fall back on if times get difficult.
Avoid Borrowing from Family and Friends
People tend to ask family and friends for a little help around the festive period. But what’s the point in borrowing from family and friends in order to buy gifts for family and friends? You might as well save yourself the time and effort by simply finding another means of gathering money or confiding that you simply cannot afford large gifts this year. This will help to prevent tensions and problems from developing down the line if you are unable to repay your dues to your loved ones.
The best way to minimise debt that comes hand in hand with the Christmas period is to minimise your spending over the Christmas period. Of course, there may be far fetched gifts that you just know your loved ones would adore unwrapping on Christmas morning. But you need to be realistic. Set yourself a budget based on how much disposable income you have. Don’t judge the amount that you should spend on your overall salary. You have to pay tax and national insurance out of this and then you have to fork out for necessities that will keep a roof over your head and food in your stomach. Wherever possible, avoid spending over your disposable income. You can do this by creating a budget for each person’s presents. Note down how much you have available to spend on each person before setting your heart on any particular gift. Then stick within your limits. Many of us tend to spend a whole lot of money by heading to the store without a plan and picking up whatever we see that we like. Another step that you can take to minimise the cost of your festive spend is to make the most of deals and offers. Black Friday is fast approaching and you should aim to complete the bulk of your spending on this date, as major retailers and small retailers alike tend to cut their prices significantly in celebration of the start of the festive shopping season.
As you can see, gifting over the festive season can be a relatively stressful experience. But if you are sensible and organised, you can swerve the detrimental effects that overspending can have on your life in the following months! Implement the above steps into your routine and financial plan, and everything should go swimmingly!
*This is a collaborative post.