Avoid 2020 debt hangover

THE Christmas debt hangover is one that lingers for weeks, even months.

Unlike an alcohol-induced hangover that usually subsides within about 24 hours, a debt hangover likes to stick around.

And with just over six weeks until Christmas – frightening, I know – retailers are trying to get shoppers to spend big.

It is so appealing to spend now and worry about it later.

It’s like a night on the town, ordering espresso martinis at the bar and not thinking about the consequences until the next day.

But for shoppers the pain comes in the new year in the form of financial heartache.

The banks will be working in overdrive in the coming weeks to market “one-off” credit card incentives to suck shoppers in to sign up and spend frivolously.

Christmas seems to roll around far too quickly and, as a result, many of us aren’t financially equipped.

In December last year, Australians’ credit card debt totalled $51.2 billion and $31.6 billion was accruing interest.

That’s frightening stuff considering many credit card debts attract interest rates above 20 per cent.

As for buy now, pay later schemes, well, they are a force to be reckoned with.

Latest Australian Securities and Investments Commission stats show, in the 2017-18 financial year, more than two million Australians had signed up to these schemes including Afterpay and Zip Pay.

So it’s become all too easy to spend up big in the lead-up to Christmas and worry about paying it off later.

We end up buying too much crap that we don’t need for people who probably won’t use it, and then we are left mopping up the financial mess later.

While it might be a little too late to set up a savings plan, it’s certainly not too late to rein in your spending.

A good strategy includes opting to do a Kris Kringle or Secret Santa. Throw all your family members into a hat and draw them out so each person is left only buying one gift, not heaps of crappy ones for every long-lost aunt.

And work out what you are going to buy for each person.

Pre-Christmas sales have become a big deal for retailers so it’s easy to snare plenty of great bargains. Also check out Singles Day, Click Frenzy, Black Friday and Cyber Monday (see story at left).

Last year I did all my Christmas shopping in November and nearly every item – unbeknown to my family and friends – was bought on sale.

And I avoided credit, leaving me minus a financial hangover come January 1.

Happy shopping!