The Cost of Christmas Debt

“I don’t remember spending all of that” you think to yourself and then the panic sinks in. You have no idea how you’re going to pay this bill!

This isn’t the time to panic, staying calm is the first step in the right direction if you want to stay on top of your finances after Christmas.

Once you’ve calmed down, the real work can begin. January is the perfect time to review your whole financial situation, even if you aren’t in financial shock.

Here’s how to go about it....

Look at your debts, how much of it is due now and how much of it is due in February? Credit cards, in the majority of cases, have at least a 30 day grace period for payment. Some cards may even have up to 56. Check how long you have to pay each credit card bill (if you have more than one), that way you can prioritise the ones that are due earliest and make the most of your cash flow situation.

Unsecured debts are non-priority expenditure, which simply means that they are not as important to pay as certain other bills. Yes, we know that might be hard for you to get your head around, but it’s true, even the lender will tell you this if you ask them.

In short, you should avoid prioritising non-priority debts over items like:

• food and water
• mortgage/rent payments,
• utilities
• council tax
• secured debts
• child support/maintenance

We have seen a lot of people cause themselves bigger problems in terms of health and financial wellbeing simply because they did not understand the difference between priority and non-priority debts.

We're not saying you should not pay anything towards your unsecured debts. What we want you to understand is that they are the first area you can trim in terms of payments if things are tough financially. Our Token Payment Method (TPM) can help you with this. If you’re worried about your credit rating, our article How important is your Credit Rating when struggling financially will help quash this concern.

Communication is key, we can’t stress this enough. If you are struggling, tell your creditors that you are (in writing). The good news is you are protected by section 7.3.5 of the Financial Conduct Authority Handbook, which means you have options like making Token Payments towards your unsecured debts. But the responsibility is with you to tell the creditors you have a financial issue! Do not ignore the situation and hope it goes away as the majority of the time it won’t.

Do not suffer in silence, ‘a problem shared is a problem halved’ remember that. If you have someone close to you who you can trust, then talk to them about your situation. If you don’t feel comfortable speaking to anyone around you, we’ve got you covered! You can always join our no judgement, no creditor or debt collector bias community by clicking here. Be sure to read our article about the importance of speaking about financial difficulty also, you can get to it easily by clicking here, once you’re done with this article of course.

It’s very surprising how few people do this - check for unnecessary expenditure. It could be an Audible or Netflix subscription that you are no longer using, or membership payments to a gym that you’ve found reasons to not go to, yes you know who you are!

Subscriptions, we find, are typically overlooked as the amounts can be quite small and not as noticeable as larger payments. Print off your bank statements and be ruthless, if you’re not using it, lose it from your expenditure.

The only expenditure that should be left after this exercise is anything that is essential to you. If you need Audible or Netflix for your mental wellbeing, keep it! The same applies to items like a gym membership, you have to decide if you are 100% going to start using it or if you're going to start next week, which turns into next month, which turns into… Well you know how it goes.

Compare your costs! Are you paying more than you need to? Think insurances, weekly shops, utilities and the rest. We know sometimes you can’t be bothered to go through the process but if you’re in January worried about money, you need to bite the bullet. You may be pleasantly surprised when you find out how much money you are able to free up by doing this exercise.

Christmas is the time for giving, receiving and, oh yes, clearing out. Be honest, are you a hoarder? If you are, this is definitely the time to change the game and evoke your inner hustling skills by selling all the old items you no longer need. Yes, we really mean all of them!

Again, it’s about being ruthless, you know deep down if you need or will use an item so don’t keep for keeping sake. Selling items that you don’t need are a quick way to bring in an injection of cash to help you through this tough time. Also don’t underestimate the value of the items you have, you might think “no one will buy that”. Just remember, one person’s trash is another person’s treasure.

The information in this article is considered to be true and correct at the date of publication.