Did You Borrow Money For Christmas?
A lot of people borrowed money to fund Christmas in the UK, with 13 million apparently unable to pay for their festivities on their wages alone. Borrowing money over the festive period is not unusual, and since the recession household incomes have been squeezed, meaning that more and more people are relying on credit to fund Christmas. This borrowing was spread over credit cards, overdrafts and loans, and many people also dipped into their savings to meet the expectations of the season.
According to a survey done by Which?, 76% used the money they borrowed to buy presents, while 22% used the borrowed cash for food. If your finances are tight for the majority of the year, then it may be nice to treat yourself and relax a little around Christmas time, but it’s also important to consider the year ahead – can your budget support you while you pay back what you owe? Will you be happy to continue paying back the money in the height of summer, when Christmas is all but forgotten? 2.5 million said that it would be well into the summer before they were able to free themselves from the Christmas debt. This is a long financial commitment and one which shouldn’t be entered into lightly.
If you borrowed for Christmas and New Year, then you should already have a plan in place so that you don’t fall into financial difficulty later on down the line. If you’ve borrowed money without thinking about whether you can afford to repayments, then you may need to sit down and go through your finances so that you know you’re able to deal with the demands on your money in 2014.
Sorting out a workable budget is a good first step. If you budget already, then don’t take that as a sign that you’re going to be all right. Getting used to a budget may mean that you leave yourself open to mistakes, and not changing your budget month by month to reflect the different demands you may have is also a bad move. Sit down and review your income and your outgoings. Can you change any of these numbers for the better? How could you do this? You may want to try online money management forums for some impartial advice (remember to never give out your personal details online and always use a false name to protect yourself).
If you find yourself struggling with your repayments then it may be worth seeking help from a debt advice charity or a friend or relative who you trust and is ‘in the know’ about financial issues. Sometimes getting an outside view can be a good way to identify problem areas that you may have missed yourself, while also getting an idea about where you could be making money too.
There are three main questions you should ask yourself when looking at borrowing some money in the future – is it worth it? Can I afford it? And will it help me in the long run?