Survive Christmas without going into debt

Last year each adult planned to spend an estimated $511 on average on Christmas presents, or a whopping $8.5 billion as a nation, according to a RateCity study.

“Australians love to be generous at this time of year and that’s great, so long as we’re spending within our means,” says Alex Parsons, chief executive of RateCity.

Yet, the study found that more than half of us planned to use a credit card to fund at least part of the costly Christmas period, with a third feeling pressured to spend more on gifts than they could afford.

Worse still, many said they may still not have paid off their Christmas cheer up to a year later. Talk about a gift that keeps on giving (to credit card companies)!  

“Credit cards can be a great tool, if used correctly – it’s vital that you have a plan to repay the balance within the interest free days.”

Christmas doesn’t have to blow the budget this year, however. There are simple ways to cut the cost of the festive season.

Set a budget

“Set a budget of what you can afford and work out who you want to buy for and what you can spend on each individual,” advises Deborah Kent, financial adviser with Integra Financial Services.

“Impulse buying is quite common at Christmas, and having a budget can help you stick to what you can afford.”

Shop around

If you are an early Christmas shopper, you can save hundreds of dollars by doing your shopping online. But even if you’ve left it a bit late, you can still save money by researching and comparing prices online before visiting a store to make the purchase.

“By just doing a simple search on a particular item you can find where to buy it cheaper and potentially save a whole lot of money,” says Kent. “Most large retailers can match someone else’s price or give you a better price for cash. It pays to do your homework.”

Pay cash

“Cash is the best way to buy at Christmas,” says Kent. If you can, pay cash to avoid being charged interest on credit card purchases and accumulating debt. It will also help you control how much you spend and minimise impulse buying.

If you must use a credit card to buy gifts, have a plan to repay the balance within the interest free days. If not, you could find yourself saddled with interest-earning debt, in which case using a balance transfer credit card could help ease the burden or consider rolling the debt into a low-interest personal loan.

Make it communal

Hosting friends and family on Christmas day can end up costing the earth. You can cut the cost by asking everyone attending the celebrations to contribute a dish or drinks. It’s also a great way to get everyone involved and introduce greater variety to the lunch table.

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