Savings trick to avoid a festive debt hangover
CHRISTMAS is only 46 weeks away – that’s about 320 sleeps.
Many Australians are nursing holiday-spending hangovers, burdened by credit card debt, but now is the time to start planning to avoid getting caught in the
PRESENT PLAN:
trap again. Here’s how you can do it:
DITCHING DEBT
If you have rolled into 2019 with credit card debt, Customer Owned Banking Association chief executive officer Mike Lawrence said you should “extinguish that as quickly as you can”. “Knock that debt off and then think about your approach going into next Christmas,” he said.
“Do you want to be in the same position at the end of next Christmas, owing money on credit cards?”
These cards usually have interest rates above 20 per cent so if they aren’t paid off in full each month, costs can quickly blow out.
‘I have about $100 a week go into the account, so I’m not looking for money at the end of the year to buy gifts for everyone’ Christmas Club saver Danielle Smith
save,” he said. “We are almost three pays down already for 2019.
“If you haven’t already started, you need to.” Smith has a portion of her pay going into a Christmas Club account – once a popular savings tool that is still offered by many financial institutions.
“I have about $100 a week go into the account, so I’m not looking for money at the end of the year to buy gifts for everyone,” she said.
“We used the money this year to buy a puppy, go to our shack at Christmas, going out for dinners and a little bit of spending money.”
Mr Lawrence said Christmas Clubs accounts – a fee-free option – prevented undisciplined accessing of cash until near Christmas.
“If you are someone who is quite disciplined you could look at a savings account that pays a good yield, but the risk is you can access the money whenever you want,” he said.