Christmas is a magical time for families, but buying a tree, toys for the children and all the trimmings is expensive. Research reveals that more than one in 10 Britons who took on debts to fund Christmas 2011 are still paying off their loans.
Parenting on Female First
“Many parents find themselves giving into temptation and putting Christmas on plastic,” says Katharine Hill, UK Director at Care for the Family, “which can leave them struggling in January when the credit card bills start landing on the doormat.”
So, as families brace themselves for soaring energy bills in 2013 after a string of price hike announcements, while food and some mortgage costs are also on the rise, what can you do if you find yourself in debt?
If you’re in debt, there is good news - you can get out of it.
Here are some handy pointers to get you started on your way to a debt-free life.
1. Know the worst
Work out your income, then your expenditure, on a weekly or monthly basis. What are the ‘extras’ you’re paying out, such as gym membership, extended warranties on goods like TV and washing machine, special insurances on things like plumbing? See where you can cut back, and cancel what you can.
2. Check which benefits you may be entitled to
Are there any benefits you may be entitled to, for example, basic Child Benefits, tax credits and Income Support to free milk and vitamins, and help with NHS costs. Visit www.adviceguide.org.uk/index/life/benefits.htm for further information on benefits.
3. Make a budget and stick to it
Making a budget is simpler than many people think. If you need some help to get you started, here are some brief templates you can use to plan a budget:
- This page gives you a basic budget sheet covering your income and outgoings: www.careforthefamily.org.uk/debtbuster/budgetsheet.asp
- This site allows you to input your own personal details onto the site and will do the maths for you: www.moneybasics.co.uk/en/resources/budget_calculator.html
And remember, once you’ve made your budget, you need to stick to it!
4. Avoid impulse borrowing
This is often described as ‘blind borrowing’ or ‘denial borrowing’. Have you ever walked into a shop and ‘bought’ something you couldn’t really afford? Maybe you took out a ‘pay-by-installments plan? In itself this isn’t a problem, but if it becomes a habit to use store cards, credit cards, ‘buy-now, pay-later,’ and other borrowing, then it can become dangerous. It’s easy to over-commit yourself and soon all your income will go on paying back debts.
5. Three questions to always ask yourself:
- Do I need it?
- Can I afford it?
- And if you are buying anything on credit: 'What is the total amount I will be repaying?' (This is a very different question from, “How much will I pay each month?”
If you borrow £50 and pay it back at only £5 a month for 12 months, you actually pay £60, not £50 for the thing you’re buying. Carry a calculator and use it to work out the total amount you’ll pay back.
6. Finally, don’t ever pay anyone for debt advice!
There are many organisations that specialise in debt counselling and debt management and their services are free. You can find details of some organisations that provide the service for free on the internet, which you can use as a starting point.
For more information, visit www.careforthefamily.org.uk/