It is very easy to spend beyond our normal monthly wages to cover additional costs which sees many of us reaching for our credit cards to pay the difference. Ideally you want to avoid debt altogether when Christmas shopping if possible.
However, with online shopping, ’tap n go’ and 'payWave' options - the more convenient and faster way to pay, we often reach for a card over cash. If you do have to use a credit card it’s good to be extra conscious of your spending and have a strategy to make on time repayments. Credit cards allow us the immediate joy of buying while putting off the pain of payment, and as such, can lure us into overspending very easily.
To avoid a large credit card bill in January, consider the following:
- If you do need to use a credit card to get through Christmas, start stocking up on gifts and other supplies early to help spread out the costs over a longer time period. This will mean you have more time to pay off your purchases and will make the cost of Christmas easier to absorb.
- Simply spend less. Simplify the menu, the guest list and the gifts.
- If you have a credit card ensure it has a low interest rate. Keep in mind that store credit cards usually have particularly high rates. If you have several credit cards, consider consolidating your debt onto the one card to make it easier to keep track of money owing.
- Black Friday and Cyber Monday sales can be a good opportunity to get gift shopping done early. However, overspending can be one of the side effects of these manic cyber shopping events so plenty of self-control, a tight budget and planned purchases are key. For ways to shop more mindfully during these sales, read this previous article.
- Paying cash is always the most effective way to reduce impulse buying because of the psychology of handing over our hard-earned cash makes the payment real. For online purchases consider using a Debit Card over a Credit Card, and when using PayPal opt for payments to come out of your own bank account rather than from your credit card.
- Set a spending limit and change your shopping habits now before you get into the spirit of the season.
- Start making allowances now for the January credit card bill.
- If you are still paying off last year's purchases, something has to change. You need to reduce this year's spending significantly. Manage people’s expectations but letting family and friends know you are keeping it simple and have a reduced budget.
- Aim to pay off your Christmas shopping debt in three months at the most to minimise interest costs.
One of the best ways to avoid using a credit card over the silly season is to be prepared well in advance and have a savings strategy throughout the year especially geared to tackle this time of year.
Consider building savings over a whole year so that when it comes time to purchase the gifts or book the holiday, you’ve got the funds already saved.
Why not devote a savings account exclusively for Christmas and Summer holiday spending? Something like Australia Mutual Bank’s Savings Motivator could be set up as a dedicated ‘Christmas Account’. This will reduce credit card debt as you will instead use the money you’ve saved up especially for Christmas spending.
If you don’t already have a savings account set up especially for end of year celebrations, now is a great time to open one, so that this time next year you’ll be laughing (instead of cringing) all the way to the shops and back again.
Exchanging gifts with loved ones is one of the pleasures of life, but always aim to do so within your means. A less expensive Christmas doesn’t have to result in people missing out. Becoming more mindful of your spending and more conscious of each purchase will allow you to appreciate what’s important. Without the worry of money woes, you’ll be more relaxed and happier, and you can focus on creating enjoyable memories of the Christmas holidays with your loved ones.
Alison Gallagher is a freelance writer, resourcefulness expert, entrepreneur and mother of two young children. She has been featured in various publications including Stellar Magazine, Australian Health and Fitness Magazine, and Cleo Magazine. Alison is particularly passionate about sharing practical tips on how to live simply, sustainably and seasonally.
