How to cut the cost of Christmas
Last year, shoppers braced themselves for a credit crunch Christmas, vowing to do their bit to spend less and save more and the same rules apply this year. However, while being frugal the rest of the year is positively fashionable, no one wants to be accused of being tight at Christmas.
Unsurprisingly then, even with cutbacks, Christmas for the average family household is set to cost approximately £500, according to a recent Asda report on the cost of Christmas.
But cutting costs doesn't mean you have to turn into a modern day Scrooge. It's simply about planning ahead and knowing where to make cutbacks - that way you can avoid the biggest Christmas traps and still have a jolly good time without a financial hangover weighing you down in January.
To find out how this would work in practice, I decided to put tips on how to slash your Christmas bill to the test.
The first thing you need to do is to set yourself a realistic budget. Working out how much money you've got, thinking of who you are buying for and deciding what you are buying, can all be done before you get to the shops.
Last year I managed to buy someone the same present twice. Luckily it was chocolate so I could easily redistribute elsewhere. I also didn't work out the price of anything beforehand or even note down the costs post-shopping trip, so I had no idea how much I had spent on Christmas presents.
Although I didn't end up massively in the red, I spent more than originally intended. This year I'm aiming to pay more attention to prices.
Agree costs upfront
If you have a tight budget why not agree on a spending limit with your friends and family? It's difficult to do but if you can bear to broach the subject, it could save you a lot. It can also help you avoid the awkward scenario where you have forked out a small fortune on the perfect present, only to get a £5 book voucher in return.
Secret Santas, where you just buy one present instead of gifts for everyone, are a good way of ensuring you don't have to buy tons of presents and although usually reserved for workplace gift-giving, they give you the chance to buy something a bit more substantial.
It might also be worth agreeing with certain people to not exchange presents or deciding to keep it in the family; 31% of respondents to a YouGov survey say that they will only buy gifts for their immediate family.
A further 14% plan on recycling unwanted presents by re-gifting them, but that might be seen as a step too far by some people.
"It's the thought that counts" may be a cliche but it still holds true. So why not try making something?
Unfortunately my artistic abilities just about stretch to drawing stick men, but DIY presents don't have to be homemade; you could offer to do someone's gardening, or a few nights babysitting for example. I'm going to copy a load of my friend's favourite podcasts onto a CD for her.
Not all of us are fans of homemade gifts so hitting the shops might be the only alternative for many people. So once you know how much you can spend, it's good to know how to best tackle the shopping.
Shopping online is a good way to make sure you get the most competitive prices. I am keen to try this as buying online should also temper my festive spending sprees and will save me money on car parking costs too - the average cost of parking for four hours in a town centre car park is £5.17, according to comparison website uSwitch.com.
Don't offset one saving with another cost though, and beware of delivery charges. Amazon.co.uk charges £2.75 per book delivered for example, so instead of ordering the cheapest copies from different vendors, group your purchases together to keep these extra costs down.
Amazon's super saver delivery is free to customers who spend over £5 ordering through amazon.co.uk directly, as opposed to through other sellers on the website's marketplace.
I'm also aiming to avoid the last-minute present dash too. Christmas Eve is synonymous with a trip to the shops in my family.
We are not the only ones though; 695,000 people anticipate doing all their Christmas shopping on the 24th and a further four million people plan to do at least half of their shopping that day, according to Sainsbury's Finance.
Last year I had just one present to get but after a quick trip to the shops I came home with a bag of cheese, a huge pandoro, which is an Italian Christmas cake, some other sweet treats for friends and a few stocking fillers that I didn't need to buy.
I had fallen into the typical Christmas Eve trap of buying anything that vaguely fitted the description of what I was looking for, just in case I couldn't find what I actually wanted.
There are also other little Christmas expenditures that can, when put together, quickly inflate your total bill, including Christmas cards. So why not make them yourself? My friend calculates that with the cost of card, glue and decorative bits she can make 48 cards for £10.
This is better value than the pricier Christmas cards on the shelves that can cost £3.99 for a box of just eight. The thought of painstakingly cutting out umpteen angels and Christmas trees prevents me from pursuing this idea.
After all, you can buy bumper value boxes of 40 cards for just a few pounds from most of the major supermarkets, and you could always send e-cards instead from sites such as ecards.co.uk and incredimail.com - helping the environment while you are at it.
Besides present buying, shopping for the Christmas dinner is likely to put a big dent in most people's wallets. Why is it that we all think we need to eat at least double the normal amount at Christmas dinner?
Gradually over the years my family have perfected our Christmas lunch so that leftovers are kept to a minimum. That's not to say we don't indulge, but mum is good at ensuring we aren't wasteful.
Instead of a whole turkey, we buy a turkey crown; none of us like brussel sprouts so apart from the six mum insists on eating for tradition's sake, we don't buy any. Last year we bought a huge Christmas pudding but had leftovers stretching into the week after, so this year we will get a smaller one.
Our drinks bill is also kept fairly low; my sister Claire works as a hairdresser and gets a decent amount of wine and champagne as gifts, supplemented with mum and dad's quiz night prize hauls.
Of course, our Christmases are quite low-key compared with some families who have to cater for a few more heads round the table. In this case why not suggest that you each bring along different dishes to spread the cost?
Take advantage of the special offers at supermarkets too, and where possible shop online; it will save you from the temptation to fill up your trolley with extras your waistline could do without.
Christmas on credit - the dos and don'ts...
Do: Plan ahead. There are 4.7 million adults still paying off debts from last Christmas, according to money.co.uk statistics. Look at putting your money into a monthly regular savings account.
Spreading the cost of Christmas throughout the year will help you to have enough money in December to stop yourself going into debt in the new year.
Do: Shop around for the best deals. As well as looking at the APR rates, check how long the interest-free repayment periods are for and, depending on the type of credit card you are looking for, compare how long the introductory 0% offers on balance transfers and purchase cards last.
Don't: Use credit cards to accumulate more debt than you can pay off. You should always strive to pay off your card within the set time limit so that you don't accrue any interest.
Don't: Be tempted by store cards and short-term loans. Unless you can pay off the money before the interest racks up, these are expensive forms of borrowing best avoided. For example pay day loan providers charge up to £30 for every £100 borrowed over 31 days.
This works out as 2,255% APR, which means on a £500 loan you would have to pay back £149.90 over 31 days or £4.84 a day.
Cook it: Make sweets or biscuits such as peppermint creams or shortbread and give them a festive theme with a Christmas tree or holly leaf cookie cutter. Wrap up homemade seasonal treats such as chutney, fruit cake or chocolate truffles in snazzy tissue paper or a gift box to show you've made the effort.
Grow it: A bunch of flowers might be difficult in the winter months but you could pot a plant from the garden.
Make it: Blow up big photos or put together photo albums or scrap books, or make jewellery using websites such as diynetwork.com for inspiration.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.