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Five steps to beat Christmas debts


Planning ahead can help you and your family deal with the extra expense at Christmas. We explain how to prepare yourself financially.

family christmas

Christmas can be a stressful time, not least from a financial point of view. If you are worried you might struggle to cover the cost of this year’s festivities, there are a number of steps you can take to minimise or at least reduce the amount you and your family end up spending.

1. Draw up a budget

Budget newspaper clipping

Now is the time to work out how much money you have to spend on Christmas against how much you will need. Setting a budget and then trying to stick to it as closely as possible will help you keep your finances under control. Take into account the cost of gifts, food and drink as well as your normal monthly expenses such as utilities, mortgage payments and council tax. If your outgoings look likely to exceed your income, think about where you might be able to cut back. Bear in mind that many employers pay staff their December salaries early – but this can be a double-edged sword. If you use too much of it for Christmas spending, you could be left with a big shortfall by the end of January.

2. Limit your gifts

Christmas gift pile on a floor

Giving and receiving presents is of course an important part of Christmas. But consider, for example, whether your relatives - even if it’s just the adults - would agree to limit the number of gifts they buy each other. You could run a version of secret Santa, where each family member buys just one gift for one relative, perhaps with an upper price limit. Sending e-cards rather than paper ones can also save cash.

3. Don’t fall into the borrowing trap

Young woman shows her empty wallet

If you can’t avoid going into debt to pay for Christmas, be aware of how much different types of borrowing cost. If you have managed to get hold of a credit card which charges little or no interest on purchases, you should have several months to clear your balance without incurring interest charges. The cost of running an overdraft can vary dramatically, however. Try to stick to your authorised overdraft limit – check your statements or ask your bank to find out what it is. And check what charges apply when you go into the red: some accounts charge a daily rate, while others impose a single monthly fee.

4. Seek out special offers and buy early

Special offer red text

Buying gifts as well as food and drink well in advance of Christmas means you have the chance to compare prices and don’t have to worry about deliveries arriving late. Sites such as let you check prices across a range of stores, while compares the cost of booze and highlights special offers. There are also a large number of sites which provide money-off codes when shopping online. When you’ve decided what you want to buy, visit or to see if any discounts are available.

5. Plan ahead for 2015

Woman using calculator

It might not seem like it but now is the best time to start planning your finances for next Christmas as well. If you can regularly put some money aside between now and next December, you’ll be in a much better position to cope with the inevitable expense. Set up a monthly standing order from your bank account to go out as soon as you’ve been paid into a dedicated Christmas savings account. And consider buying the likes of crackers and decorations in the January sales: they’ll be substantially cheaper than this time next year.