When your monthly debt repayments are a constant struggle, the last thing you need is to welcome holidays with more credit to your name and less money in your bank account. These tips help you avoid debt during the festive season and enjoy stress-free holidays.
Stick to a holiday budget
A 2020 research revealed that 75 percent of South Africans spend over and above their regular expenses over the festive season. While some like to dip into their December bonuses and savings, others feel they have no choice but to use credit cards or take a short-term loan to enjoy the festivities.
Without a proper budget, it’s no wonder that many South Africans, come December, rack in higher credit bills and loans to make holiday dreams come true. Thankfully, you can avoid debt during holidays with some minimum planning and budgeting for every activity: categorise and track expenses such as gift shopping, entertainment, and travel.
Limit festive spending
Set a realistic amount you can confidently spend at this time of the year and without incurring any additional debt through credit card usage and high-interest short-term loans.
- Focus on the main festive meal if you’re celebrating at home, having a braai or going to a restaurant. Food costs, home decorations and other activities can still add up, so it is best to keep the family fun within your financial means.
- Make a gift list before going shopping and allocate money to each present. It’s best to set a maximum amount for each present to avoid overspending (see more below for credit-free shopping and gifting.)
- Create a travel budget if you intend to spend the holidays away from home. Think of ways to lower costs with travel expenses, including fuel, accommodation, meals, family activities, souvenirs.
You may need to compromise to stay within the budget and avoid the debt trap, but it’s worth enjoying this festive time without the stressful consequences brought by mounting debt repayments.
Say no to credit card debt
The festive season is known for its general excess, and shopping is the primary debt culprit. Last year, Stats SA estimated that working South Africans could contribute a whopping R210 billion to the economy during holidays – that’s a lot of present shopping!
For most South Africans, festivities start with credit-fuelled shopping trips and overindulgence in holiday sales. You may want to try these suggestions to curb retail debt and credit card temptation.
- Pay cash for all purchases. This is a great way to stay away from retail store credit when browsing the shops. Get into the habit of bringing a shopping list and a set cash budget.
- Be careful and selective with holiday sales and store promotions, keeping within your predefined budget. Shopping early also reduces holiday stress.
- Use store promotions, loyalty points or rewards where available to cut purchasing costs.
- Invest in personalised homemade gifts. If you are a creative person, forgo the shops altogether and show appreciation to loved ones without the extra cost; also great when you’re on a limited gifting budget.
- Build memories instead of credit card debt. Sharing an experience with family and friends, for example, joining a Christmas market, is infinitely more valuable and memorable than overpriced store-bought items.
Have a low-cost and guilt-free holiday
You should stop taking extra debt during the festive season when you’re already heavily over-indebted and in danger of defaulting. There are still ways to enjoy spending time with your loved ones while keeping it low-key and saving money as much as you can.
Choosing a ‘staycation’ instead of travelling locally or abroad drastically cuts down your holiday budget. You may not even afford to travel this year or may have to cancel plans (due to the pandemic impact). No worries, an intimate get-together or braai with family or friends is a beautiful way to get into the festive spirit.
Gift yourself a debt-free future
Sometimes you need to make a conscious decision to stop the debt snowball and pull your resources into repaying existing debt instead of taking an extra burden. It’s possible to avoid adding debt during holidays by working on a plan to tackle your current debt issues.
For example, you could use the year-end bonus or any source of additional income to put towards current debt repayments instead of taking a new loan or maximising credit use to buy more expensive gifts, drowning deeper in debt.
This may be the perfect time to gift yourself debt-free financial planning or choose debt counselling to tackle all your debt and start the new year on a positive financial note.
A debt counsellor can provide professional help to assess your debt situation objectively, consolidate your multiple debts and negotiate a better repayment plan with creditors. Meanwhile, you cannot incur additional debt while under debt review, the perfect solution to avoid piling on more debt during the festive season.
Our professional ezDebt advisers help you stay on track with debt repayments through affordable debt counselling. All our debt counsellors are registered with the National Credit Regulator (NCR). Get in touch at www.ezdebt.co.za.