We all know that 2020 has been a year of constant change and uncertainty. But the year is nearly over. And one thing we all want to do is enjoy ourselves this Christmas time!  But we all also need to consider how to avoid getting into debt this Christmas.

It is possible that it is going to be more of a financial struggle than usual for some this year. With furloughs, job losses, reduced hours and added pressure all around, we are, sadly, likely to see more people getting into debt and struggling to recover in 2021.

But just because money may be tight this year, it does not mean that you can’t enjoy yourselves and make the most of what you can afford.

The great news is that there are ways to avoid getting into debt this Christmas altogether, if you are sensible and plan.

How to Avoid Getting into Debt - Tip One:  

Review your household bills

This might be a good time to review your outgoings. Ahead of the new year, it is often a good thing to check your bills and make sure you are on the right energy tariff for instance, orrunning with the most efficient mobile and broadband services.

Many of us have managed to save a little during the earlier months of Lockdown – with fewer take out coffees and lunches at home instead of shop-bought sandwiches. So, a reassessment of your outgoings now might be quite a pleasant surprise!

Check your bank account for subscriptions and work out if you use them all often enough to warrant the ongoing cost.  From Amazon, Audible, through to gym memberships... ask yourself if they're really worth continuing with.

Be honest, and work through what is going to be important heading up to Christmas and into the New Year.

The most important thing regarding your household bills though, is to make sure you keep them up to date. The last thing you want is to start falling behind with these crucial payments. Gas, electric, water and your mortgage or rent are essentials.

If you do start to fall into difficulties with payments, speak to your service providers and let them know what’s happening. They may be able to work a payment plan out for you and help you avoid getting into debt.  But beware, any agreements will be noted on your credit file and so could affect your credit rating - but far better a temporary note which shows you're being responsible than missed payments and defaults showing up!

How to Avoid Getting into Debt - Tip Two:  

Set a Budget for Christmas

As you might not have been going out with your friends or family as often as you would have done under normal circumstances this year, it might be tempting to make up for it now, with extra spending.

But don’t fall into that trap!

Even your own little ones can often put the emotional pressure on. But let’s face it, you can never tick off everything on their Christmas list anyway! So just do what you can.

Be realistic with your family and friends who you would usually buy for. We are all in the same position, and nobody expects you to spend a fortune on them.

So set a budget. And stick to it!

Work out what you need for your groceries, household bills, etc and then think carefully about how to spend what's left.

How to Avoid Getting into Debt - Tip Three:  

Money Saving Sites and Sales

Getting to this time of year, and not knowing what to buy, can often lead to panic buying.

But it is still worth taking your time to find options for saving even a small amount of money, before going crazy in the aisles!

There are some great sites available for cashback offers, money off activities and packages, and voucher codes up for grabs. You will find some amazing deals through the likes of Groupon, Quidco, and TopCashback. Money reward apps of any kind will bring savings on items you would probably be buying anyway, so make sure you make the most of every opportunity.

And of course, there is Black Friday and Cyber Monday coming up soon. And with Lockdown having impacted the non-essential stores again recently, chances are there may be some sales once this period is over, with time before Christmas to pick up some more bargains!

How to Avoid Getting into Debt - Tip Four:  

Credit Cards and Short Term, High Interest Loans – the hazards!

The pandemic has caused inevitable cash flow problems for many this year. But one thing to try and avoid is upping your credit limits on high interest credit or store cards, applying for new credit cards, and especially short term, high interest loans.

Unless you can sign up for a 0% interest account, it is simply not worth the additional interest you will be paying over the longer term. And it is far too easy to go from one month to the next thinking you will pay off the balance, just to find it is increasing as you keep adding to it.

Although there is much more awareness and tighter regulation around these lending options, they are still an easy way out of immediate cash flow problems. But with a potential 1000% APR on some of the immediate cash release loans, make sure you are fully aware of what you could be signing for.

Other Money Saving Tips

  • Facebook Marketplace, eBay and other online selling sites will work to your advantage to bring in some immediate cash – have a good clear out of those store cupboards and wardrobes, you never know what is hiding away! Watch out for any fees you might have to pay, and don’t rush to get things listed. Take your time, take pictures that will sell the product and remember “one man’s trash is another man’s treasure.”
  • Not just about selling on these sites though, you can also pick up some brand-new items which might tick a few presents off your list.
  • Batch cook – simple as it may seem, buying in bulk and then cooking for the freezer can save more than you think. Just don’t forget what is in there and end up buying double. Or get lazy and order take-away that will cost twice as much. Casseroles, soups, and winter puddings are a great way to make the most of vegetables and fruit which might otherwise be heading to their sell by date and would get wasted.
  • Even if only for this year, think about the true value of Christmas. Is it about spending precious time with your loved ones? Or is it just to keep up with the newest of everything and to keep them from sulking?!

What to do if you get into debt this Christmas

  1. Keep in contact with your service providers, loan providers and your bank as necessary. Speak to them and let them know what is happening. The worst thing you can do is bury your head and think it will all resolve itself.
  2. Do not stop paying the household, utilities, and services bills. Even if you have to go without some luxuries for a month or so, do not let your bills go unpaid and risk an uncomfortable Christmas Day.
  3. Take control as soon as possible – get back on track.

If you need any guidance on how to avoid getting into debt this Christmas, or consolidating current debt, speak to one of our experts. We may be able to help.  Have a great Christmas, be sensible, and stay safe.