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Christmas holdays

How to stay out of debt these holidays

BY MARIA PAPA – Christmas is a great time of year for most Australians.
It’s a time of eating and drinking, giving and receiving, spending time with loved ones and taking a holiday. Australians also like spending money – the turkey, ham and prawns to serve on Christmas day and the latest gadgets or toys to put under our Christmas tree.
A survey made by St George Bank late in 2018 found that the average household Christmas expenditure across food, festivities and gifts total $1,325. It also found that many Australians funded this via their credit card.
According to research made by Finder, the average Australian credit card holder faced $1,863 in post-Christmas debt.
This is much higher than what the St George study found. Based on an analysis of the Reserve Bank of Australia, Australians borrowed nearly $30 million on credit cards in December 2018.
The release of annual joint ARA/Roy Morgan pre-Christmas predictions for 2019 – covering 14 November to 24 December estimates Australians to spend almost $53bn before Christmas, up by 2.6% from 2018.
How then can we avoid suffering from the dreaded holiday spending hangover?
The last thing you want is paying that credit card debt for the next 6 months of 2020.
Luckily, there is still time to take steps to avoid yet another holiday hangover. First and foremost, set yourself a budget.
Of course, the main goal is not to overspend. Make a list of all the things you will need to spend money on, this can be things like presents, food, down to a new outfit for the office Christmas party.
Before going into a store or shopping online, make a list of the people you plan to buy gifts for and the total amount of money you are able to spend.
Seriously think before you decide it’s a great idea to buy that extra gift for your favourite niece or nephew or your favourite goddaughter or godson.
Think twice about going out for drinks or a third dinner in a week with friends to celebrate the holidays.
Ask yourself, “Can I truly afford this?”
Create a holiday spending budget right now. Start planning your income and anticipated extra expenses for the holiday months ahead. You need to include all your regular expenses, as well: rent, mobile phone, utilities, etc. Start to track your purchases and be honest.
And that doesn’t mean only gifts. This includes entertainment, travel and holiday party expenses. Track what goes on the card, as well as cash out of your pocket.
Finally, it’s never too early to start saving for next year’s gifts. Start planning out how much to set aside in future months so the holidays don’t drain the savings.
Because you have kept track of what you’ve spend this Christmas, divide that number by 11 and come January, put that amount aside and deposit in a high-interest savings account.
Resist the urge to touch it in the next 11 months.
This will be your little Christmas nest egg ready for the next holiday.
This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs.
We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product.
It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.
MBM Mortgage Pty Ltd trading as Maverick Finance | ABN 28 149 301 084 | Credit Representative Number 403019 is authorised under Credit License Number 389328
Maria Papa is a senior finance expert specialising in home loans, investment loans, self-employed loans, Alt Doc loans, car loans, personal loans and loan protection.
She has offices in Sydney and Melbourne.
If you have questions, you can call Maria at 0430 144 008 or email her at