Plan to avoid debt and all the misery it can bring

By Philip Evans

Christmas may seem like a long way off but shops and advertisers have already been planning for a long time how to get us to spend our money in ways that suit them. TV adverts, magazine articles and shop displays will try to persuade us that we will be happier at Christmas, better parents or just more liked when we buy their products.  It is not too soon to begin to plan to spend what money you have on what is important to you, not what is important to them

Your first priority should be to plan to avoid debt and all the misery it can bring in the New Year. Each New Year, advice agencies deal with millions of debt problems and thousands of people go bankrupt because they overspent at Christmas.

If you are in business, you will want to do well this Christmas – but you will not want to end up in debt. And if you have employees, you will not want them struggling either, because money problems impact every area of our lives, including our relationships and our ability to function well at work.

Anything worth enjoying is worth planning for. Here are some tips to help you stay in control of your life this Christmas and avoid a debt hangover.

Forget Christmas for a minute and work out how much money you will need to pay your usual bills during December and January.  Many people don’t get into debt at Christmas because of what they spend on Christmas but because they fail to keep back enough money for when it’s all over and they have to pay for rent, electricity, food, petrol, mobile top-ups and the rest.

Decide to use your credit cards to buy only the things you can afford, so that you can clear the balance at the end of the month. Many people still have not paid off the credit they used last Christmas and still will not have by the time they start spending on this Christmas. If you don’t pay off your credit card balances in full each month, or if you don’t clear your overdraft within a month or so, you can end up paying an awful lot in interest for something you are not enjoying any more.

Only buy what’s important to you. If you can afford it, buy something for no other reason than that you like it! Or if you think that somebody else will like it as a present. But try not to give in to passing whims, like new decorations that catch your eye or Christmassy CDs that you’re sure someone will like – or another crate of beer just in case…  Avoid buying expensive stocking fillers, especially if you’re also buying expensive presents for your family.  Refuse to be tempted into buying things that are nothing to do with Christmas, like new tvs, fridges and sofas. Retailers know that at Christmas we catch the spending bug, so they try so hard to get us to commit to replacing expensive household items.

Make shopping lists. The failure to make an old-fashioned shopping list is, I think, the biggest single cause of overspending and why an ‘average’ UK household will throw away about a third of its groceries unused. Supermarkets are designed and run to get us to spend more than we had intended but a list will helps to keep us focused on what you need and what you really want. But don’t stop there. Make a list of the presents you want to buy people, rather than just window shop in the hope of something suitable catching your eye, and then shop around for the best deals.

Do not upgrade or accessorise. Once you have made the decision to buy something, sales people will try to get you to upgrade to more expensive alternatives, often ones with the ‘right’ label, or to buy accessories you had not thought you wanted. When we buy a burger, we are invited to ‘go large’ and to add fries, drinks and other food; when we buy clothes, we are offered other items to match it; when we buy an iPods and mobile, we are offered headphones, batteries, vary cases, vouchers and lots more. Stay in control of your spending and only buy these extras if you need them, not because they sound like a good idea on the spur of the moment.

Don’t believe what you see on tv. I’m not talking about the adverts now but the soaps, like Eastenders and Coronation Street. We like to think they reflect real life but the scriptwriters don’t have budgets for the characters and nobody gets into debt at Christmas unless it’s in the plot! If they were real people, splashing the cash in the Queen Vic or Rovers Return and trying to impress people with expensive presents, they would be broke in January. As you will be, if you are that extravagant in real life!

Philip Evans is the personal finance tutor at All Souls Clubhouse in Cleveland Street. You can pick up free literature there or download it from the website: www.clubhousew1.org/moneyed .

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