Christmas: Earlier this year?

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If the retail sector is to be believed, Christmas is coming - and has been since September.

Barely had the “back to school” offers been cleared from the shelves before the glitter, sparkle and traditional Christmas fayre appeared in their place, vying for our attention and creating an urgency that we all find difficult to ignore. Then there are the Christmas editions of all manner of mail order catalogues bombarding the doormat on an almost daily basis, plus Internet offers inundating your inbox. You just cannot ignore it.

It’s coming, it’s unavoidable but will you manage it any better than last year? The UK leads Europe in credit card ownership - so we know a thing or two about shopping.

However, the downside is that personal debt continues it’s upward spiral. The last five years has seen a bumper 86% increase in personal debt, whilst average earnings have only increased by 28.5%. It therefore comes as no surprise that a recent survey by leading debt advice organisation Payplan, revealed 80% of us are worried about meeting the cost of Christmas which last year averaged out at £813 per head of the adult population

But what can you do to avoid the post - Christmas financial hangover that’s all too familiar to many of us?

The short answer is firstly, plan ahead and secondly, once you get the other side of the festive season, do a financial reality check, confront the cost of Christmas, then take some practical steps to recovery.

Given that experience tells us prevention is better than cure, the following advice can help avoid the shop in haste, repent at leisure predicament:

Ideally, save to provide a financial buffer for the Christmas budget.
Whether or not you’ve been able to do this, plan what you can afford and set a realistic and affordable spending limit. It’s often easier to stick to your plan by paying in cash so you know exactly when you reach your planned limit.

If you need to resort to credit, remember that store cards and mail order catalogues offer poor value.

It’s all too easy to overlook monthly card repayments during the Christmas holiday and pay dearly for the oversight. Don’t lose sight of your existing financial obligations during the festive season.

To try and control your gift budget, agree a spending ceiling, for example £10 per gift. With adult friends or relatives try to negotiate a “no gifts” pact.

And whilst shopping, don’t ditch your bargain-hunting skills for the festive season - shop around for best value. There may be a risk of not getting what you want, but the pre - Christmas sales can help cut costs.

There’s really no reason to pay over the odds, particularly if you’re using credit, so shop around. The Internet can often help reduce the leg work, but check delivery lead times during the run up to Christmas day.

And after Christmas? Well, the soft option would be to just to let the retail therapy continue into the January sales and beyond.
Alternatively, just take a moment to check precisely how much you owe, and look at the impact this will have on your monthly budget.

Chances are this will be a sobering experience. But the good news is that you will at least be recognising that there comes a time when you have to take control. The sooner you move away from minimum payments and start making inroads into the debt legacy left by Christmas 2005, the sooner you can get back in control of your finances, and your life.

Now may be the time to think about a financial resolution that starts before Christmas. Why wait for the New Year?

PCS Case Study

One PCS member approached Payplan after receiving threats of legal action from his creditors. As a single parent, the client had struggled with the daily costs of running a house and raising a family, to the extent that he had applied for a credit card.

Unfortunately, the client eventually found himself struggling with 4 credit cards and a consolidation loan. When he contacted Payplan, his debts totalled almost £16,000 and he was failing to maintain his mortgage payments. After receiving threats of legal action from his creditors, the client contacted Payplan’s team of specialist debt advisers for help.

After negotiating with his creditors, Payplan were able to establish regular monthly payments to his creditors that he could afford, whilst maintaining his mortgage payments and a good standard of living for himself and his family.

As Payplan do not charge a fee for their service, every penny paid by the client went towards clearing his debts. After 4 years of making regular payments, the client was debt free with his financial freedom restored.