How To Avoid Financial Crisis This Christmas
I hate to bring up the topic of Christmas so early but when it comes to avoiding the potential financial aftermath of yet another overly expensive festive season, it’s never too early to start preparing.
As January and the good weather approaches, so does the realisation that a very large credit card bill may well be on it’s way. If the dreaded balance doesn’t leave you financially crippled for the rest of the summer months, it could well be costing you hundreds of dollars in interest costs with credit card interest rates generally ranging from 12 - 20% +.
The good news is you have 3 months to help lessen the pain, here are five ways to help you get ahead this festive season.
Put aside money into a separate bank account - this is the easiest way to spread out the extra cost of Christmas over the next three months. Work out how much you can afford to put aside then set up an automatic transfer to move the funds into a separate savings account every time you get paid. It might mean less disposable money now but will be well worth it come January, even $20 a week amounts to over $260, enough to cover pressies for the kids and perhaps a treat for you.
Christmas Clubs - if self discipline is not your strong suit, consider joining a Christmas Club with the likes of PaknSave, New World or Countdown. You contribute regularly just like a savings account and are incentivised with bonuses to increase your grocery spend at Christmas.
Buy now, pay later - traditional layby’s involve buying now, spreading the payments over a number of weeks and picking the items up once fully paid off. This can help spread the cost over time with no interest costs or fees. Now also available is a layby alternative where the items can be taken home straight away. Shoppers have been warned however as late payments incur fees as well as having the potential to negatively impact your credit score so always check the fine print before signing up.
Spend less - we don’t want you to become the Christmas Grinch but by setting a budget for what you can afford and sticking to it you might find the New Year to be less financially stressful. Think about getting presents for the kids that will help get them ready for school so you wrap two costs into one, such as school bags or stationery or vouchers for activities you can do with them over the holidays. There is merit to the phrase living within your means, Christmas should be no exception.
Utilise low interest rate credit card offers - come January and you find yourself in the very predicament we have tried to help you avoid, consider transferring your credit card balance to a low rate credit card. Set up a payment plan so you are paying off the principal as fast as possible before the interest rate reverts back to standard and be aware the low rate is only applicable to the transferred balance. Better yet, cut up the credit card so you aren’t tempted to use it … at least until next Christmas!