What do I do if I overspend over Christmas?

How to survive the most expensive time of the year.

For many in the UK, December is an expensive time of the year, with the average adult in the UK predicted to spend a total of £567 on seasonal food, drinks, socialising and gifts1.

The spending breaks down like this for those who celebrate Christmas:

Gifts: around £300

Extra spending on food and drink: £150

Socialising with colleagues, family and friends: £66

Season travel costs: £51

When you consider the travel costs involved with visiting friends and family and getting back home from company seasonal social events, those figures look a little on the conservative side, and for many, the true cost will be higher.

Most companies pay their staff earlier in December to help their staff pay for Christmas and because many of those organising the payroll will be away on the usual monthly pay date. This can cause issues for staff though, as being paid early can make it harder to budget. This is often because many people arrange for their regular bills to be paid on or just after they have been paid, so that they know that what is left in their account is ‘disposable’ income.

Being paid earlier in December can make it harder to see what amount needs to be left to one side to cover the bills and other usual outgoings. This can make January a tough time for many, with a financial hangover from Christmas to cope with on top.

Whilst many will dip into their savings to cover the extra expense of Christmas, if you just have no money put aside for Christmas and the aftermath, here are some ways to cope with the ‘financial hangover’:

  1. Go on a spending freeze

If you overspent over Christmas, by cutting back as far as you can in January you may be able to re-balance and compensate for over-doing things in December.

  1. Earn extra money

Did you receive any unwanted gifts? If so, you could try selling them online. Or perhaps you could work overtime to at least bring more money home in your next pay.

  1. Look out for 0% balance transfer credit card deals

If you have a balance on your credit and store cards, some credit card companies may be interested in offering you a balance transfer deal. To encourage you to move the debt from your existing credit card(s) some may be prepared to offer you a better rate as low as 0%. Of course, this promotional rate will usually only last for a limited time, but this could give you time to clear the debt, without racking-up further interest costs.

However, try not to move the debt from your card to the 0% deal and then just start building-up a further balance again as this will just end up being a further drain on your income.

  1. Search for a better deal on your bank overdraft

If you dipped into your overdraft to cope with the expense of Christmas, try and get back into credit as soon as possible. If it is likely to take you a long time to pay it off, consider switching your account to another bank or building society if they have a better (lower) overdraft deal, especially if they will enable you to transfer your current balance over to them.

  1. Consider a consolidation loan 

If you are struggling under a pile of loans, credit card repayments and overdraft fees, it may be best to replace them all with one consolidation loan.

Having just one, fixed repayment to make per month will be easier to budget for. It may reduce your outgoings by a considerable amount each month. However, you may end up paying more out in interest over the term of the loan than if you just continued with the repayments on the various loans and card balances. Please check or ask a loan broker such as Loan.co.uk for expert advice.

How can I avoid a Christmas cash crisis in the future?

Nobody wants to be a killjoy and advise that you ‘cancel Christmas’, but if you do not carefully plan for the added expense it brings, you could easily end up needing months to recover financially. So, with that in mind, here are a few suggestions you may find useful:

    • Build-up savings for Christmas. Only you know how much you actually typically spend on Xmas expenditure, but the national average is £567, so try and save at least £50 per month to cover your seasonal costs. That way you can keep credit related costs to a minimum.
    • Consider your spending more carefully. Would purchasing one quality item work out less expensive than buying a dozen cheaper items? The lucky recipient will probably remember the one, well thought-out gift but will they really recall a lot of stocking fillers that actually ate deeper into your budget?
    • Make a Christmas budget and stick to it. Do not be tempted to spend more than you initially decided. If you misjudged the price of some items, is it possible to spend a little less elsewhere? For example, if you overspent on gifts, could you spend a little less on socialising to ‘balance the books’?
    • Look for the best deals. Just because something is online does not automatically mean it is a bargain. Look around both online and on the high street and check out the prices carefully. If you do decide to shop online, look out for voucher codes and watch out for scammers.
    • Take advantage of sales. If there are genuine bargains to be had in say, a summer sale, why not buy some of the presents then and put them away for Christmas? Are there any Black Friday sale items that would make popular gifts for your loved ones? If you are seeing some of your family in the New Year, could you purchase gifts for them in the January sales?

What do I do if I am in financial difficulty?

If you had a spending spree at Christmas that has added to already unfeasibly high levels of debt so that you now feel unable to cope, consider getting free advice on what to do next from a debt charity such as National Debtline.

References:

1Deloitte European Christmas Survey 2018: https://www2.deloitte.com/uk/en/pages/consumer-business/articles/deloitte-christmas-survey-2018.html

 

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