Ditch the presents – it’s not worth getting into debt for Christmas

1 December 2017

Many of us will wake up on Christmas morning to find a windfall of presents strewn at the end of the bed, hanging in a stocking by the fireplace or carefully placed under a cheerfully decorated tree.

But has Christmas spending got out of hand? Our Moneywise.co.uk poll reveals that 28% of the 992 people who voted plan to spend between £1 and £250 as a household over the festive period, with 24% (the second biggest group) planning to spend between £251 and £500.

And that might not be the end of it. Research published by TSB found that while people plan to spend £427 on average this Christmas, unexpected costs – such as work parties, unplanned gifts and travelling to see family – adds an extra £346 to the bill. Because of this, nearly a quarter (23%) of Brits anticipate they may go into debt to cover costs this festive season, according to TSB.

Last year, debt charity the Money Advice Trust, found that one in three people (33%) put Christmas on credit.

More worrying still is that debt seems to be affecting the younger generation particularly hard.

In October, Andrew Bailey, head of the Financial Conduct Authority, told the BBC: “There has been a clear shift in the generational pattern of wealth and income, and that translates into a greater indebtedness at a younger age.”

This is backed up by debt charity Step Change, which has reported that the proportion of younger clients seeking its advice has grown by 10% over the past five years, and now almost two thirds of its clients are under 40.

StepChange chief executive Mike O’Connor says: “Young people today are less well off than older generations were at the same age, with a fall in real wages and soaring housing costs, especially in the private rented sector, forcing them into debt to get by day to day. As owning a property is unattainable to many young people, we are also seeing an increased number of renters contacting us for support with their problem debt, with four out of five of our clients renting.”

He adds: “While around half of our clients are in work, the rise of the gig economy and insecure, low-paid work mean household incomes are less stable and unable to cover the most basic living expenses.”

I’m highlighting this issue because it’s not worth getting into debt or increasing your debt just for Christmas.

The Money Advice Trust, the charity behind National Debtline, has five tips to help you:

  • Set a budget for presents, food, and decorations – and stick to it.
  • Shop around for deals. Always compare prices to get the best deal – Megashopbot.com is a good starting point – and consider buying your presents later in the month when the sales start.
  • Resist the urge to borrow more. If you’re paying for Christmas on card, ensure you can afford to repay it.
  • Keep paying the bills. Don’t forgo your normal household bills in December, such as mortgage, rent, council tax, gas and electricity – you still need to pay these on time.
  • Seek free advice. If you’re worried about money or debt, get free advice from charities such as Citizens Advice, National Debtline, and StepChange.

Ultimately, Christmas isn’t about competing over who can buy the best present or how big your turkey is, it’s about spending time with your loved ones – and who says you need a turkey with all the trimmings?

You could give your time instead – a ‘voucher’ for an evening of babysitting or a week’s worth of ironing, washing-up and walking the dog, for example. If you have kids, perhaps create a ‘voucher book’ for them to redeem that’s filled with free activities – trips to the park, museums or fun events in your area.

If you say you’re struggling, friends and family will understand.

Read more about cutting your debts on Moneywise