Festive season financial hangover stories in January are a media certainty it's merely a question of how many pieces appear on families overspending their way into debt during the Christmas and the New Year holidays.
Some will manage to pay what they owe by the spring bank holidays. But many will resort to the pawnshops seemingly springing up everywhere, or to payday loans which promise an ultra fast cash injection at a price of an annual percentage interest rate that can run into four figures. Those most in difficulties will take out loans to pay off other loans and keep on spending - a downward spiral that could end in bankruptcy and homelessness.
The festive season is a joyous religious festival or a pagan midwinter celebration. But whatever your view, no one wants financial misery.
However, it is almost impossible, especially if there are children, to opt out. Whatever your standard of living, no one has limitless finances so the easiest way to avoid the January financial hangover is to plan now.
It sounds obvious but basic budgeting and then sticking to it needs discipline. Involving friends and family will help
keep your resolve
Decide on what your household can comfortably afford. Then subtract 10 to 15 per cent to allow for unforeseeables - an unexpected guest or a taxi
home from a party.
I find the Christmas dinner is the hardest expenditure to avoid. It's also, for many, the most public display of the season with guests having food expectations. Knowing how many to cater for and planning the menu is my first financial step to a solvent season. I like shopping in person for food and drink but, although prices may change by December 24, supermarket websites give a good indication.
Create a list, stick to it and, again, avoid impulse buys if for no other reason that the least thought out presents are often the most unsuitable.
Daft as it may sound, a large piece of cardboard - the inside of a cereal box will do - with the words 'impulse shopping is a no-no' (or similar) is a cheap but effective method of preventing waste. There's a huge annual tonnage of costly Christmas food that's binned.
If you have a big Christmas dinner, offer guests some organisation. You may not want them all to bring bottles of red wine so ask one to buy wine, others cheese, chocolates, or mince pies.
Present pacts help budgeting.
One significant contributor to January cash problems is trying to impress other people with ever more expensive items. Many families have present opening sessions where everyone sees what everyone else has given and gets. This obviously does not happen at birthdays or anniversaries. It's a gift arms-race where each person tries to outspend the others.
So, by mutual agreement, call a truce and agree a family and friends price limit on gifts to other adults. Create a list, stick to it and, again, avoid impulse buys if for no other reason that the least thought out presents are often
the most unsuitable.
Others may even thank you for all this as many find gift price escalation embarrassing both financially and personally but don't know how to break the cycle. Budget for each present.
Children are different. Explain that a really expensive item such as a computer is really a Christmas and Birthday present combined. Older children would rather have one useful item than a whole load of tat in the trash by Boxing Day.
Using the price limit pact idea, give older children some guidance of what adults might want from them that is within their budget.
There are loads of money saving ideas such as:
- recycling gift wrap
- buying half-price Christmas puddings just after Christmas and storing them for next December (they do keep!)
- sending seasonal greetings by email
- buying early or buying late, as many retailers have offers in the earlier weeks of November and then again in the last week before Christmas.
But one big off-budget impulse splurge could ruin all that saving.
Sticking to the plan you create in November (the best time to cook cakes and puddings) takes the pressure off December and could save a major financial headache in January - a hangover that will take more than a few
paracetamol to cure.