Over spending during the silly season – Do you have a plan?

In an ideal world this would be a one sentence article. Don’t spend too much money at Christmas. As we all know though, the world is never that simple, and Christmas is going to be more expensive than other parts of the year.

If like most people, the holiday season is going to be more expensive for you than the rest of the year, we need to develop a strategy to allow for the extra costs over this period.

The best option is to be already prepared. Have already factored increased costs for the silly season, adjusted the budget accordingly and already have Christmas savings. Lots of people have Christmas savers and alike that really assist with this strategy.

Some people do this without even realising. Buying presents throughout the year, taking out lay-buys and initiatives like the Chrisco hampers saving plan are all methods of spreading the Christmas cost throughout the year.

Given we are in December for many readers this may be a strategy for next year!

The most common way that the average person deals with the increased spending this time of year is through credit, almost always a credit card.

Although not desirable this may be necessary for many people, and if that is the case for you, all our plans need to be about paying the credit card off as quickly as possible.

The interest rates on credit cards are typically very high, in most cases in the high teens up to the early 20 percent mark. The interest costs on even relatively small debts add up quickly making it difficult to repay.

If you have accumulated credit debt over Christmas, you need to allocate funds from your budget to pay it down ASAP. This may involve making some short term sacrifices in the budget to get back on track.

Ideally once you have paid off this year’s festivities, it is time to start saving for next year’s Christmas to avoid being in the same position next year.