How to heal hol­i­day debt hang­overs

The silly sea­son is com­ing to an end, but the fi­nan­cial reck­on­ing is only just be­gin­ning.

Sunday News - - NEWS -


If you are re­ally strug­gling to pay, talk to the lender as soon as pos­si­ble. They may help you work out a pay­ment plan so you do not get charged penal­ties, or have your pur­chases re­pos­sessed.

Un­der the Credit Con­tracts and Con­sumer Fi­nance Act, bor­row­ers have the right to ask for the term of a loan to be ex­tended or for a re­pay­ment hol­i­day if they have suf­fered hard­ship. That cov­ers things such as ill­ness or job loss. You’ll need to do this promptly be­cause you can­not ap­ply if you have been in de­fault for two months or more, or been late with four con­sec­u­tive pay­ments.

Koh said peo­ple should deal with the causes of short-term debt, so they did not end up back in the same po­si­tion. ‘‘Build up an emer­gency fund for un­ex­pected ex­penses or loss of in­come, and make a bud­get to keep your spend­ing within your in­come.’’ ONE of the sad parts of en­ter­ing your late 20s is that you’re no longer im­mune to hang­overs. Sure, I’ll of­ten wake up feel­ing sur­pris­ingly chip­per af­ter a big night but a cou­ple of hours later the headache sets in, and I get in­creas­ingly pa­thetic as the day drags on.

This sort of delayed hang­over is worse than a reg­u­lar one, be­cause the time lag means it builds up a head of steam be­fore it hits you like a freight train.

It’s the same with the Christ­mas spend­ing blowout. For the first cou­ple of weeks there are no con­se­quences: you’re on hol­i­day, eat­ing left­over ham, ring­ing in the new year, laz­ing at the beach, not a care in the world.

Then the credit card state­ment for De­cem­ber ar­rives in the mail, along with the first util­ity bills of 2018, and your cousin asks for that $50 they loaned you. The room starts spin­ning, your heart pal­pi­tates, and the bile rises in your throat. The hol­i­day hang­over has ar­rived.

How do you cure a hang­over? I Googled this ques­tion in des­per­a­tion re­cently, only to find the num­ber one sug­ges­tion was to ‘‘drink less al­co­hol’’, which was not much help con­sid­er­ing Santa didn’t bring me a time machine.

It’s just as fu­tile to try to cure the hol­i­day debt hang­over, the dam­age is al­ready done, and you can’t put the clock back. How­ever, there is one up­side to hav­ing your head buried in the toi­let bowl: Con­di­tions are per­fect for mak­ing a firm res­o­lu­tion never to re­peat the ex­pe­ri­ence.

Step one is to fig­ure out how

Fig­ure out how much you’ll need to save up through­out the year, so you won’t have to bor­row a cent come De­cem­ber.’

much you’ll need to save up through­out the year, so you won’t have to bor­row a cent come De­cem­ber.

Once you’ve got your num­ber, you’ll need to de­cide where to stash the cash. The sim­plest strat­egy is to open a bonus sav­ings ac­count, and set up au­to­matic trans­fers into it on pay­day. You’ll earn about 2 per cent in­ter­est, as long as you’re not mak­ing any with­drawals.

If your fes­tiv­i­ties in­volve lots of food and drink, the su­per­mar­ket Christ­mas clubs might be a bet­ter op­tion. Count­down vouch­ers can be bought through­out the year, then cashed in for a 5 per cent bonus spend in De­cem­ber and Jan­uary, which is a much bet­ter re­turn than the bank.

The Pak’n’Save and New World scheme pays a juicy 6.4 per cent bonus for any sav­ings you stash be­fore the end of Fe­bru­ary, a rate which re­duces in stages to 3.4 per cent by Septem­ber. You can also set up an au­to­matic pay­ment, which means you can keep the sav­ings tick­ing over with­out hav­ing to think about it.

If presents and toys are the main fo­cus, The Ware­house also has a Christ­mas club of­fer­ing a 5 per cent dis­count on what­ever you spend, along with the abil­ity to make au­to­matic top-ups through­out the year.

Lastly, there are the ham­pers. Bas­kets of treats can be paid off in small chunks over the course of the year, then de­liv­ered to your door in De­cem­ber. This is a good way to re­sist temp­ta­tion, be­cause the pay­ments are locked away from you, but it should be a last re­sort – the same prod­ucts are way cheaper at the su­per­mar­ket.

It doesn’t re­ally mat­ter which strat­egy you go for, as long as you make a choice soon and stick to it through­out the year. If not, you’ll never break free from the an­nual cy­cle of hol­i­day hang­over hell. Got a burn­ing money ques­tion? Email Bud­get Buster at richard.mead­ows@thedeep­, or hit him up on Face­book. You can also find links to pre­vi­ous Bud­get Busters here.

New Zealan­ders set new spend­ing records in the fren­zied lead-up to Christ­mas, and now the debts are fall­ing due.

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