It’s supposed to be a magical time of the year but a new study has revealed that almost a third of people are struggling to pay for the festive season and are lining up a new year of hardship and debt.
According to a new survey commissioned by debt management specialists, The Debt Advisor, more than 14% of people rely on their December pay packet to cover the cost of Christmas, 8.5% use a credit card to pay for the festive season and 5% duck out completely and don’t indulge because they can’t afford it.
But more worrying is the revelation that over 30% of people really struggle to manage their finances in January as a result of the Christmas excess and over 19% of people are taking up to six months to pay for their festive cheer through loans or credit cards. And almost 8% of people say they never seem able to pay back what they’ve spent on credit spiralling them into deeper debt and problems.
The news has prompted Debt Advisor’s Beverley Budsworth, a specialist in advising people on debt management, to issue a reminder to people not to overstretch themselves at Christmas. Beverley said: “I love Christmas just like everyone else and I don’t want to be a finger-pointing scrooge but it’s important that people think about what they can actually afford at Christmas. “
In fact the New Year, when the bills start arriving, is one of the busiest times of the year for Debt Advisor as people who may have buried their heads in the joy of Christmas face up to their financial reality.
Beverley added: “We all use new year as a fresh start and many people decide to get their finances in order but what I would say is don’t wait until break point to take action. It’s so much better to tackle these issues early before debt becomes a major problem.”
The survey which was conducted in October 2015 revealed that most people spent their money on presents for the children with 26% of people saying that’s their main expense. And a staggering 21% of respondents admitted to spending between £200 to £500 on each child with 11% spending between £500 and £1K. A minority of almost 3% said they spent over £1K per child.
And nights out also accounted for some of the Christmas spend with 41% of people spending up to £50 on a night out over Christmas and 10% spending over £100 for just one night of fun.
As far as the Christmas food shop is concerned, people push the boat out with almost 50% of people spending between £100 and £200 on the shop compared with just £96 for the rest of the year.*
But people are concerned about excess and worried about the consequences of the Christmas spend. According the survey 65% of people would like to spend less at Christmas, 40 % of people say they are worried about how much they spend on Christmas and 10% actually lose sleep worrying about Christmas costs. Despite this only 5% of people have resolved to spend less at Christmas.
According to Beverley, Christmas is a tipping point for many people who are struggling with their finances. 14 % of people surveyed said they have unaffordable debt which they would like help with but have been putting it off. Worryingly almost 10% of people said they are too embarrassed to speak out and seek help with their debt.
She explained: “Debt is not a demon but when it becomes unaffordable it really can ruin lives. It’s incredibly worrying to know that 14% of people have a problem but have been putting off seeking help but even worse to know that a tenth of the sample are too embarrassed to seek help. I would say to those people that there’s no shame in debt. It’s a common issue and there is a wide range of help available for people.”
And she added: the good news is that the survey shows 8% of people with debt issues are planning to tackle it after this Christmas. That’s really heart-warming to hear.”
In fact that’s a trend Beverley and her colleagues see every year. In January the number of people seeking professional help with debt advice rises.
Beverley added: We know that people will use January to seek help with their finances but I would urge people who feel too embarrassed to ask for help to tackle their fears and seek help and support. As soon as you shine a light on debt, it is instantly more manageable.”
All debt solutions should be very carefully considered. Fees will be charged if The Debt Advisor assists with a debt solution. There are sources of free debt advice and services. You can find out more by contacting the Money Advice Service on https://www.moneyadviceservice.org.uk/en/articles/where-to-go-to-get-free-debt-advice or 0300 500 5000 (English) or 0300 500 5555 (Welsh).