Saturday 21 April 2018

Smart Consumer: 12 saves of Christmas

(How to have fun without breaking the bank)

Charlie Weston

Charlie Weston

Christmas is almost upon us, but for many the celebrations will be tinged with worry as money has never being tighter.

A new survey found that more than half of the population will get into debt to fund the festive season, which means that Santa won't be the only one in the red this Christmas.

And it will take most people until the summer to pay off the loans taken out to finance the seasonal splurge, with some expecting to take up to nine months to settle their debt.

What this means is that for lots of us 'tis the season to be thrifty.

A credit-crunch Christmas beckons but it does not mean we can't have fun; it just means we need to consider every cent spent far more carefully than previous years.

That's because nobody wants the ghost of Christmas spending to be still haunting them in the new year.

It is very easy to get caught up in the frenzy of Christmas, with slick marketing pushing the season earlier and earlier each year.

Here are some tips to avoid a financially fraught festive season. They may ensure you deck the halls with boughs of holly, and not debts and credit card bills.

1 Budget

Be brutally honest with yourself about how much you can spend on your yuletide celebrations. Set yourself a budget and stick to it. Always remember that Christmas is but one day a year.

Most people expect to splash out around €500 this year, significantly down on spending in previous years, according to a recent survey conducted by iReach for the Irish League of Credit Unions.

Men are set to spend more. Most men surveyed said they expected to shell out €750.

The majority of spending by adults at Christmas goes on presents, followed by food.

The survey also found that key areas for cutbacks this year are gifts and nights out.

Once you have worked out what you are going to spend, then it makes sense to withdraw a lump sum from your current account and only spend that amount, assuming you have sufficient funds in the bank.

2 Manage expectations

If the seasonal squeeze is set to impact you, then why not explain this to family and friends. We are all set to pay more tax and charges next year, so mention this.

They are bound to understand, and you may well find that they are in the same boat anyway.

You might even consider agreeing with some of your friends that you will not exchange presents this year, given the dire financial straits we all find ourselves in.

Another idea is to organise a Kris Kindle or secret Santa, where members of a group are randomly assigned other members to whom they anonymously give a gift.

3 Make a list

Decide what you are going to buy in advance. If you leave the decisions until you get into the shops, you will end up spending too much.

Women are better at making a list than men. This is one reason they tend to spend less than men at Christmas, according to the iReach research.

Most men have fallen into the trap at some stage of finding themselves in a jewellery shop late on Christmas Eve and end up panic-buying something that is bad value.

4 Pay with cash

Avoid borrowing money to fund the festivities. The last thing you want to do is to start 2010 with a debt disaster.

This means you would be well advised to avoid loans, credit cards, store cards, catalogues and moneylenders.

Some people will be tempted to borrow from moneylenders -- either the ones who call to your door offering you cash immediately or those other moneylenders known as credit-card providers.

Moneylenders are tempting because of the convenience of someone offering you money at your doorstep. But you will pay interest that works out at an annual rate of up to 188pc.

The hefty interest rates charged by moneylenders means the interest alone could be as much as a third or a quarter of the actual loan.

Credit cards are also tempting. They are always in your pocket and can be used to tide people over this hugely expensive time.

It is probably smart to leave the credit card at home when you go Christmas shopping, and use cash or, failing that, use your laser or debit card instead. That way you can only spend what you have in your bank account.

Also worth avoiding are in-store cards and in-store credit, both of which tend to be punitively expensive.

A better option is a credit-union loan where the interest rates are a fraction of those charged by moneylenders or credit-card providers.

5 Compare prices

Before you buy anything, compare the prices online with those charged by the shops. You could be amazed at the difference.

Do not be afraid to negotiate. The economy may be on the rocks, consumer spending is at an all-time low and money is tight, but rejoice in the fact that you can haggle. Many store owners would rather sell at a discount than see you leave their shop without buying anything.

6 Watch the food bill

Write out a list of all the food you will need to buy over the coming Christmas period. Be realistic.

When we buy too much food, it often goes to waste so try not to bring the kids with you and remember you aren't stocking up for the whole winter.

As the Money Advice and Budgeting Service (MABS) points out, the shops will open again immediately after Christmas.

It might help to keep the spending down if you remind yourself of all the unopened boxes of biscuits and all the perishables that were thrown out last year.

Shopping from a list helps us only purchase what we really need rather than picking up expensive impulse buys along the way.

If you have never tried discount stores Aldi and Lidl, then you are one of the few.

In the past many have snootily turned up their noses at what they regarded as "cheap" shops, but not any more as people realise how reasonable the prices are and that they provide high-quality offerings.

7 Get interest-free deals

You can save money by opting for an interest-free deal when buying furniture or electrical goods.

But make sure you complete the payments before the interest-free period is up. Otherwise, you will end up paying hefty interest.

8 Check for sales

Many shops will have sales before Christmas. Ask around, and maybe you could get those presents for even less!

9 Read the small print

If you borrow or enter into a buy-now-pay-later deal, be careful.

Some lenders will penalise you for paying it back early or, if you do not pay it within the interest-free period, you could be subject to hefty interest payments.

10 Seek help

Suffering from debt stress? Call into your local credit union to discuss your options, the Irish League of Credit Unions advises.

11 Friendship is free

The best gift at Christmas is being together -- and that costs nothing.

There are many ways of saving money without taking away the magic.

12 Don't forget the ordinary bills

Not only is Christmas one of the most expensive times of the year, but those people who get paid monthly have to wait for five weeks between their December payday and the next one in January. No wonder so many of us are so skint in the new year.

Be conscious of this long delay in getting paid when you are lashing out money on Christmas celebrations.

Set money aside for bills expected in January. It will give you peace of mind knowing you won't struggle in the New Year, and you can enjoy Christmas knowing there are no nasty surprises around the corner.

Irish Independent

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