Christmas debt brings future regret
Christmas overspending and Boxing Week deal-chasing can lead to financial crisis
If you are someone who carries a lot of debt and you couldn’t restrain yourself from going into debt while shopping for Christmas, the Boxing Day sales could provide the coup de grâce for any financial self-control.
Overspending at Christmas, followed by deal-chasing during Boxing Week, often leads to bankruptcy or at least the need to seek out a credit counsellor who can help restructure debt in order to stave off the B-word.
According to MNP Ltd., a bankruptcy trustee and debtcounselling firm, most Atlantic Canadians who carry debt are likely to carry some post-holiday guilt and regret after Christmas.
MNP Ltd. recently sponsored a survey that was conducted by Canadian polling firm Ipsos. It found that 29 per cent of Atlantic Canadians have felt remorse about how much they spent over the holidays. In the case of this survey, the results are considered accurate to within plus or minus 2.5 percentage points, 19 times out of 20.
Many people may be tempted to seek help from an experienced trustee or counsellor immediately after Christmas, but it isn’t that easy. Most of the trustee and counselling companies I con- tacted on Wednesday are closed and won’t open until after the New Year. The best advice, in that case, is to not panic and stop shopping, despite the attractive Boxing Week sales.
MNP quoted its own licensed insolvency trustee in Halifax, Joe Wilkie, who pointed out something that seems obvious to most of us but apparently not to everyone: “The (Boxing Week) deals may look tempting but they are not worth the debt hangover in the New Year.”
If after using credit to make the purchases you end up carrying a credit card balance well into the new year, the deals often will end up costing a lot more than anticipated, he said in a company news release.
“To those already carrying any balance on your credit cards, skip the Boxing Week sales and instead put that cash you would have spent toward paying holiday bills,” MNP’S Wilkie advised.
About 34 per cent of Atlantic Canadians, more than any of the other regions surveyed, have felt anxiety over the arrival of their holiday spending bills. According to the survey, 22 per cent of Atlantic Canadians say they have lost sleep because of over-spend- ing on the holidays.
Guilt, anxiety, fear and stress are familiar feelings for most overspenders following the holiday season. Some deal with these feelings during the post-christmas, January activity lull by spending even more, which makes matters worse, according to MNP.
People who feel helpless or embarrassed about their debt may try to simply ignore their finances altogether, Wilkie said. “Some may choose not to open the bills when they arrive, allowing the debt to snowball. My advice is to seek help right away. Start the new year with a budget and a clean path out of debt.”
Confronting debt can be a depressing reality at first, but there are ways of resolving debt problems, including: consumer proposals, orderly payment of debts, debt consolidation, credit counselling, or an informal debt settlement, MNP advises.
The survey found there are differences in how the different generations react to carrying debt. Millennials and Gen Xers are more likely than baby boomers to feel regret and anxiety at this time of year. About half of millennials surveyed have vowed in the past to resolve their financial woes, which leads MNP to suspect debtors in that generation will make that vow again.