Avoiding Christmas debt stress
Mother-of-two Kim Hudson has been preparing for Christmas since June, when she started putting aside $20 each week.
‘‘That will pay for all the Christmas food and extras in December.’’ While this year is looking good, she has not always been so organised.
‘‘Last year was a disaster and we ended up in a lot of debt in December, trying to get presents and extra things, so this year we decided to start in June.’’
It is now less than three months until Christmas. But if the prospect fills you with more anxiety than excitement, there is still time to turn it around.
Here are five ways to get on track for the festive season.
Christmas clubs
Consumer NZ spokeswoman Jessica Wilson said that for people wanting to save primarily for their Christmas food bill, supermarket Christmas clubs were worth considering.
Countdown, New World and Pak’n Save all have systems to help shoppers save for Christmas. At Countdown, you can buy vouchers in denominations of $5, $10 and $20. You get a 5 per cent bonus when you redeem them through December and January.
New World and Pak’n Save have a Christmas Club card, which offers bigger savings bonuses the earlier in the year you start putting money away.
If you start with $20 a week now, you will end up with about $250 at Christmas, plus the additional bonus. At Countdown, that would give you about $265 in spending power. That’s a much better payback than you’d get in interest if you put your money in a savings account.
Layby
If you already know what you want, you could choose a layby to spread the cost.
The Warehouse offers a $10-deposit layby option from time to time, rather than its usual 20 per cent requirement. A spokeswoman said the promotion often ran during school holidays and at Christmas. She said it was a popular option.
That was what Hudson chose to do for her kids’ presents this year.
‘‘I did a layby in June, when the Warehouse had the annual toy sale with $10 deposit, then paid it off over the 12 weeks. I have two boys and we decided to go with three decent presents this year, instead of lots of little things.’’
There are also new layby options designed primarily for online shopping, but available in some physical shops, too, which allow goods to be taken home straight away and then paid off with no interest.
Trade Me recently introduced Afterpay, which spreads payments over eight weeks.
Spokesman Rick Davies said there was strong demand. ‘‘We think it’s going to play a huge part in Kiwis’ Christmas shopping this year - it’s a great way to spread the pocket pain of mass giftbuying.’’
Savings accounts
Wilson said a basic bank savings account was the best option for people who wanted freedom in how they spent their money.
It’s probably too late in the year to make it worth hunting out a specific Christmas option, as offered by some of the credit unions, but if you put aside $30 a week between now and Christmas, you’ll end up with about $380 to spend.
Credit card
Putting it on the plastic is a back-up option for lots of people at Christmas. To make it work, avoid taking on more debt than you can repay in the month. Most cards do not charge interest on purchases for up to 55 days, provided you have paid all your previous bills on time.
It gets expensive once you start to carry a balance. If you rack up $2000 on a standard credit card, and pay it back at $200 a month, it will take a year to get rid of and cost you $230 in interest.
If you really get stuck, transferring the balance to a zero-interest card at another bank may be your best option.