Easing the Christmas financial pressure
Ever noticed how, despite the fact that Christmas falls on the same day every year, we seem to try and avoid thinking about one of the biggest financial hotspots of the year? In order to avoid the financial fallout in 2008, we’ve come up with a few suggestions to make your Christmas pay packet (and bonus if you’re lucky) go further.
Although you probably don’t need to go as far as writing ‘Christmas Day’ on your calendar for 25 December, planning ahead can save you a financial hangover next year. Start by making a list (and checking it twice!) of people you want - or need - to buy presents for. Include any costs for travelling and entertaining you’re going to do. Set a budget for all this and stick to it (although this may get trickier after a few eggnogs).
Avoiding shopping traps
By sticking to your shopping list and shopping a bit earlier on, you’ll be able to avoid the crowds and get everything you want without having to resort to panic buying on Christmas Eve.
And as we all know, it’s too easy to pop into the supermarket for a loaf of bread and a pint of milk and come out laden with bags and $100 less in your wallet. To get round this, draw up your full Christmas food shopping list before you go to the supermarket – and obviously you’ll avoid having to put up with Uncle Jimmy moaning about the lack of cranberry sauce on Christmas day as you’ll be well prepared.
The idea of getting through Christmas without your credit cards may be a bit scary but it could save you months of debt worries in the New Year.
Try leaving your credit cards at home and venture out with cash instead. Work out how much money you’ll need to withdraw to last you a few days. It’s easy to hand over a plastic card when you buy something, but if you’re handing over a $100 note in a shop it can make you think twice about whether that purchase is really necessary.
Loan and credit traps
If you do decide to get into debt, find out how much more you’ll be paying for goods on credit before you decide to sign a contract – the lender has to tell you this. Then check the interest rate and compare it with other lenders, noting what any late payment or default fees will be. Think about when payments are due. Will they coincide with other regular household bills and expenses?
When you enter a credit contract, this information must be given to you by the lender in written form, it’s called a ‘disclosure statement’. It contains information about your credit contract including payment information, interest rate and cancellation rights.
If you’ve managed not to use your credit cards over the Christmas period, well done! But if you’ve given in to temptation, when January sets in maybe it’s time to see if you can shift your debt to another credit card provider. The banks in New Zealand are all vying for your business, with some offering rates on credit card balance transfers of 5.9% for six months. That’s quite a difference when compared to some standard rates of 19% or more.
Use caution though, these balance transfer deals normally only last for around six months so try to pay your outstanding balance off before the higher interest rates kick in after that period.
Consumer Issues Advisor, Debbie Bidlake, says: “It can be very easy to get into debt at Christmas time. Talk to a budget advisor before Christmas to discuss ways of arranging your budget which won’t place too much stress on you and your family.” You can find your local Budget Advice Service in the White Pages under ‘B’.
That just leaves all of us at the Ministry of Consumer Affairs to wish you a very merry Christmas. If you’d like more information on credit issues, visit our website.