How to heal holiday debt hangovers
The silly season is coming to an end, but the financial reckoning is only just beginning.
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 firstname.lastname@example.org, 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.