MoneyLink Articles

Dreaming of a debt-free Christmas?

Posted December 4, 2018 by MoneyLink

Dreaming of a debt-free Christmas?

Christmas is a crazy time of year for haemorrhaging cash. But it doesn’t have to be this way. You can keep your spending in check and your financial goals on track.

Around the globe there’s a growing movement of people who put less emphasis on buying things, and more emphasis on people, places and happiness. Known as minimalism or mindful consumerism, it has been sweeping across the globe via blogs, self-help books and social media.

Minimalism, of course, comes with its challenges. Not everyone is ready to give up the tree with the tinsel and fairy lights, the bubbly and the seafood and the gifts wrapped in shiny paper.

But, perhaps not so surprisingly, this move towards buying less often attracts new converts during the festive season when people balk at the scale of Christmas spending.

‘Biggest’ Spending season

As Australians, Christmas is our biggest ‘spending season’, and many people go get caught up in the festive spirit and regret it later.

Part of the problem, is getting swept away with Christmas ‘consumerism’ – it’s difficult to avoid if you live anywhere near a shopping mall. And in Australia of course, Boxing Day signals the start of some of the chain stores biggest ‘sale’ periods.

It’s also summer holidays – and with the kids on about six weeks leave from school it’s an ideal time for family holidays. Or expensive just keeping them entertained.

The truth about what we spend

The Australian Retailing Association recently released figures that expect Australians will spend more than $51 billion over the Christmas trading period from 9 November to 24 December – a period that doesn’t take into account the post-Christmas sales.

And, as reported previously, according to MoneySmart, 36 percent of people will put their Christmas spending on a credit card, and 4 per cent will cover costs with a loan. About 82 per cent of people will take up to six months to pay off that debt.

Another survey by Finder conducted in 2017 found that nearly 4 million Australians (41 per cent) are likely to return from their holidays with a debt lag of a collective $7.5 billion.

Avoiding debt traps

Right now, Australians are being urged to avoid over-using their credit cards – it is generally the easiest way to find yourself in serious debt, and the rise of ‘buy-now-pay-later’ schemes is also becoming a concern.

A new ASIC report has found shoppers have racked up more than $900 million in debt through buy-now-pay-later schemes such as after-pay, and other incentives by some retailers which have tempting ‘no deposit’ and ‘interest-free’ periods.

ASIC says that most consumers who use ‘buy-now-pay-later’ are between the ages of 18 and 34. Two million consumers actually using the service compared to 400,000 just two years ago.

Over-spending and unnecessary debt are two serious considerations, but when you add this to the current economic uncertainty – a natural by-product of a ‘cooling’ house market, constant rhetoric about interest rates rises, and a looming federal election – Australians would be wise to keep their spending in check this year. After all, serious financial stress is difficult to get out of.

Keep your financial goals on track

If you haven’t set a Christmas budget, it’s wise to do so. If you haven’t put some money aside, then it’s probably almost too late, but there is one resource that may help you to keep control of your spending, and it’s the TrackMySPEND app, available from ASIC’s MoneySmart website. It’s a handy tool for noting personal expenses on the go.

It’s important to enjoy this time of year – after all, it’s a wonderful time for family and friends to get together and spend time together, which can be a rarity when we’re all running in different directions with our own busy lives.

It’s just important to remember not to go overboard. Knowing what you spend and how you spend it, is how you keep your financial goals on track, and remember that your presence is the greatest present you can give.

This is general advice and should not be treated as personal advice.
It is provided by MoneyLink Financial Planning Pty Ltd ASFL No: 247360.

More Articles

Got a minute?

Get in touch if you're keen to get ahead and stay ahead.