Six tips to get out of Christmas debt and get back in control of your finances

A five pound note, two pound coins, a 50p coin, 20p coin and 1p coin on a table, from above
Helen Ganney
Helen Ganney

External Affairs Relationship Manager

Six tips from enthusiastic budgeter, Helen. 

Twas the season… was Christmas really just a few weeks ago? Now the tree and tinsel well and truly stowed away, and you’ve eaten through your stash of festive treats, you might be feeling the squeeze of your post-Christmas bank balance. Even if you kept to a budget, you might have spent more than you really wanted to and now be thinking should I be worried?’

What can you do to get your finances back on track?

If you find yourself regretting the amount you spent in 2023, and you’re now finding that the later’ part of buy-now-pay-later’ is due, or you’re dreading the amount you think you’ll need to spend in 2024, you’re far from alone.

According to research by the Money and Pensions Service, almost 14 million people planned to borrow money to fund their spending for the festive season alone last year, including Christmas and Hanukkah.

The survey found that around half would use credit cards, a third would use buy-now, pay-later options, and a quarter planned to rely on their overdraft to see them through. Others would ask friends and family for help, and a small percentage (6%) would apply for a credit union loan. Whatever the means of borrowing, high-cost, short-term credit was considered by 18% of those surveyed, using either payday loans or pawnbroker loans.

Most importantly, 10% of people thought that it would take more than a year to repay what they planned to borrow. This means that they would be going into next Christmas already in debt, and no doubt will have to take out more credit to cover that. And so on, and so on, into 2025, 2026, 202…

I’ve been a keen budgeter for over 20 years, meaning that Christmas, birthdays, holidays and less fun things like MOTs are planned, budgeted for and paid in full each time. I’m not a financial wizz, but I’d like to share some basic budgeting skills that have really helped me.

Six tips to help you get in control of your finances

If you’ve struggled with the cost of winter or Christmas on top of the cost of living, how can you make sure you’re not falling into the spiral of borrowing to pay for this year’s costs?

(Just to be clear, I’m not a professional financial advisor, just an enthusiastic amateur budgeter!)

1. Pay everything back as soon as possible

Pay everything back as soon as possible to reduce spending on borrowing. Look at the credit you’ve taken out. What’s costing the most in terms of interest? How much can you realistically pay back regularly? If possible, try and pay back more than the minimum payments to reduce how much you pay in the long-term.

2. Check you’re receiving the income you’re entitled to

Are you receiving all the income you’re entitled to? Check out our free benefits calculator to make sure. For special occasions or one-off costs like Christmas or car MOTs, work out what you can afford to spend without taking out credit. That’s your budget. Split the amount over the number of months remaining and pay that into a separate savings account each month.

3. Treat your savings as a bill

Treat your savings as a bill. Don’t wait to see what you’ll have left at the end of the month. It’s easy to spend disposable income and have nothing left over to build up savings.

4. Have conversations with family and friends now

Worried about how people would react to a lower cost gift or opting for cheaper social activities throughout the year? Have conversations now with your family and friends. Manage expectations and let them know that you’ll need to be a bit more frugal this year. Plus, they might be grateful you mentioned it, as they’re in the same position!

5. Get help with budgeting

Budgeting help is available if you’re not sure where to start. There are free apps you can use, and you can download free budget planning sheets, including CAP’s free budgeting tips and downloadable resources. If you want a helping hand, Christians Against Poverty provides free, expert financial education through churches across the UK and The Open University offers free budget coaching.

6. Seek free debt advice

If, when you’re looking at your finances, you realise that your debts are more than you can repay in a reasonable amount of time, and you need help and advice, don’t wait to seek free debt advice from Christians Against Poverty (CAP), StepChange, PayPlan, or Citizens Advice. The Money Helper website has a directory of other debt advice providers that can help.

With the TUC (Trades Union Congress) forecasting a £1,400 rise in personal debt for UK families in 2024, there’s no time like the present to get on top of your finances, spending, and saving. Prioritising this as early in the year as possible could help you face the coming months with money peace, not money panic.

Get free debt help with CAP

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