How to control the cost of Christmas
It's a season of debt as well as goodwill when people spend too much
Friday 09 November 2012
Money worries might be keeping people awake at night, but many will still overspend during the run-up to Christmas.
Some will take out payday loans while others will let energy and council tax bills go unpaid to buy presents for their children.
But there are other ways of doing things, and these become easier when we understand our own behaviour. This time of year "is the most dangerous because you impulse-buy", says Maggie Kirkpatrick of the Consumer Credit Counselling Service.
Paul Crayston of National Debtline says: "Calls to us are always at their lowest in December (as people put aside debt worries) and their highest in January (as people face up to money worries post- Christmas)."
CAP (Christians Against Poverty) gives this advice: "Don't take out a Christmas loan and end up giving yourself a miserable start to 2013".
In exclusive research for The Independent, R3, the body for insolvency and recovery professionals, has found that nearly three out of five people (59 per cent) are worried about the level of what they owe.
Over a quarter (29 per cent) have absolutely no "buffer zone" in the form of savings – a big increase on the 20 per cent of people in January who had no savings. So why do some of us overspend now when we know that this could lead us into nightmare territory, such as court or eviction?
"Very often parents have a huge amount of social pressure on them," says psychologist Dr Michael Carroll, visiting professor at Bristol University. "Parents are emotionally hijacked by society, TV, children and comparisons into forgetting that they will spend the next year trying to pay off what they spend now."
It is particularly difficult for single parents who have no ally in the home and might already be feeling guilty or inadequate. "All you need is a demanding child who doesn't give up," he continues.
Eastbourne-based Maggie Kirkpatrick paints the picture of "Granny" whose family descends on her for Christmas, rightly assuming she will be delighted to see them but underestimating the financial implications for her.
"People don't think it through. They pop Granny £100 but they don't realise how little £100 goes when you are feeding six people. Granny is on a fixed income and it's only in January she might realise this has cost her £1,000."
Ms Kirkpatrick is seeing more people aged 60-plus getting into debt, many as a result of family pressures.
But there are ways to tackle the issue. Family agreements are recommended by Dr Carroll, National Debtline and Ms Kirkpatrick.
"They are exactly what you should do," says Mr Crayston.
"Start talking to people," says Dr Carroll. "Say 'Christmas is coming up. How are we going to celebrate? What are we going to spend?'"
As Ms Kirkpatrick says: "Christmas is a shared activity."
Overspending on a unilateral basis can put other people in a difficult position, choosing between the embarrassment of not reciprocating with expensive presents and getting into debt. A family agreement could, for instance, put a £30 limit on presents per person or have a £10 ceiling for adults and a higher one for children.
The debt advisers have many tips for keeping costs down, including making a list of presents to buy rather than impulse-buying; sending vouchers (and so avoiding postage costs); giving services (like babysitting for a couple one night and buying them cinema tickets for the new James Bond film); having a present-free agreement for adults; and making a budget.
Buying early may not always be the best route. Half of people, according to HSBC, will have bought their presents by the end of this month. But, once engaged in the pleasant process of buying for others, they may feel tempted to repeat the experience and so to overspend.
Budgeting is the tip which many of us will baulk at. Keeping a record of spending can sound deeply dull, miserly and complicated. But it is also the best way to get and keep control over one's finances.
"I have so much more peace of mind because of it," says Gavin (not his real name).
He can do it easily on the computer and he really enjoys the treats he gives himself now, rather than feeling guilty about them. The trick is to produce a realistic budget, not one which will be broken and abandoned early on.
The worst aspect of overspending at Christmas is that it can educate children to expect funding from their parents, at the cost of real love.
"There is a term in psychology about creating 'hungry children'," says Dr Carroll.
"The child says: 'Can I have...?' and you give them what they ask for. But, instead of satisfying them, you create a hunger in them. You can't feed them enough."
This quickly leads into the territory of comparison games between siblings, where they become envious of each other for receiving particular gifts and do not appreciate the loving thoughts underneath. Parents simply become cash cows in these circumstances.
So what is the best strategy to avoid being seen principally as a source of funds?
"Get it out in the open," says Dr Carroll. "Help people to think systematically and bigger. Help them to think about what they want in life and with their family, not just what they want from Christmas."
So while there may be tears and fights at first, people become more aware of the trade-offs that we all have to make in life – for instance, the idea that we might be able to afford a summer holiday if we hold back a bit now.
Christmas is the ideal time to help children start learning this lesson. In this way, instead of getting a computer game they will have forgotten about in a week they will start to acquire, in Dr Carroll's words, "a life skill" which will last them forever.
David is negotiating with his 14-year-old foster daughter, Nina, about how much she can expect to receive in Christmas presents this year.
Nina's natural mother had got into "horrific debt" and even gone bankrupt. Part of that slide involved giving Nina £300 or £400 of Christmas presents annually.
David says: "Her rationale was: 'I want Nina to have what I didn't have'."
But this year David and his wife have explained to Nina that they want to cap the spending at £50. "She said she wanted more presents than that," says David. "It's very difficult for her at that age, especially with clothes."
They asked Nina to do some research with her friends – "she came back and said some parents spend up to £300. I was quite shocked. And that included some parents without jobs."
Case studies: ‘We negotiate with 14-year-old Nina over her presents’
David and his wife have now managed to make Nina see that spending more on Christmas will mean they might have to cut back on the summer holiday. They have taught her that if she wants something new she has to contribute a certain percentage of the cost – which they negotiate with her each time – from her pocket money.
And the result of the Christmas negotiations? "We're sticking on £50."
Sarah, a single mother, married a widower and wanted to make sure her new stepson had a great Christmas in 2010.
So she spent £1,000 on credit cards.
"It was the first Christmas after the boy's mother died, so we decided to have a big Christmas," she says. "We thought we could pay it off over the next few months."
But in the event "it wasn't good because the kids opened the presents then went off to see grandma. I had spent a fortune and it wasn't worth it."
Worse still, Sarah's new husband became ill in the New Year and was off work, reducing their income further. Eventually the couple sought the help of their local Christians Against Poverty centre, who came to see the couple at their Sheffield home. The charity negotiated with creditors and set up a budget for the family to live to while the debt began to be paid off.
Christmas 2011 was very different. "I did a dummy run for Christmas dinner and discovered I could do it for £15 from Asda," Sarah says. "I had a Christmas box which I put in a cupboard and stocked up. I put things in and said 'Don't touch that, it's for Christmas'. We made our own Christmas cards and bought wrapping paper in the January sales for 20p! It was fabulous. We had a far better Christmas."
Names have been changed
NEED HELP? JUST CONTACT...
CAP (Christians Against Poverty) www.capdebthelp.org
Consumer Credit Counselling Service cccs.co.uk and 0800 138 1111
National Debtline nationaldebtline.co.uk/england_wales/factsheet.php?page=19_how_to_avoid_debt_at_christmas and 0808 808 4000
Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk
Interest-only mortgages return to give more flexibility to borrowers
Bargain Hunter: Exclusive discount on a SmartGlider - a self-balancing electric scooter
My Tinder date asked for a refund when I declined a second meet up
Bank-beating exchange rates on your international payments
Be warned of the dirty tricks the bailiffs pull
- 1 What marriage would look like if we actually followed the Bible
- 2 President Obama leaves touching comment on Humans of New York photo from Iran
- 4 The Chinese city where men have 'three girlfriends because there are so many women'
- 5 'Heartbreaking' Syria orphan photo wasn't taken in Syria and not of orphan
Britain to take more refugees as Cameron bows to pressure after more than 250,000 back our campaign
Senior British politicians tell David Cameron: When dead children are being washed up on beaches – it's time to act
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
If these extraordinarily powerful images of a dead Syrian child washed up on a beach don't change Europe's attitude to refugees, what will?
If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
Make your voice heard: Sign The Independent's petition to welcome refugees
iJobs Money & Business
£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...
£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...
£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...
£14000 - £16000 per annum: Recruitment Genius: This company was established in...
Day In a Page
This five-bedroom home in Sutton Coldfield is arranged over three floors, with a detached garage to the rear and a driveway at the front of the property.
In an elevated position above the bay, this four-bedroom home offers sea and headland views. There is a decked balcony and sun terrace - plus coastal walks on the doorstep.
With four bedrooms, this spacious maisonette in a mid-terrace period-style house in Holland Road is well-maintained and offers high ceilings and period features.
The terraces of this two-bedroom penthouse apartment offer panoramic views that stretch over fifty miles from the cliffs of Beachy Head.
In the heart of the coastal village of Mumbles and moments from the pier, this five-bedroom Victorian terrace is set over three floors and retains many original features.
In a sandbanks location, moments from the beach, this three-bedroom apartment has a large open-plan living area and a south-west facing balcony.
This four-bedroom home has an annexe accessed from the side of the house, with potential for improvement and conversion subject to the necessary permissions.
In the heart of the hamlet of Wardley, this five-bedroom period home offers countryside views and a stylish interior, with original features and open fireplaces.
Offering countryside views and landscaped gardens, this three-bedroom Grade II-listed lodge has a spacious conservatory and a large cellar that could serve as a workshop.
Set in approximately 1.5 acres, this four-bedroom home comes with a second, detached property that's currently used as an annexe.
In the hamlet of Newchurch, this former parish church is now a four-bedroom home complete with clock tower and eyrie.
Offering scenic views from a large balcony and sun terrace, this four-bedroom home has a wraparound garden and a heated swimming pool.
Offering views across the Humber and East Yorkshire Wolds from a glass panelled balcony, this four-bedroom barn-style home befits a life of leisure.
This four-bedroom home offers versatile accommodation with annexe potential; features include a hot tub, sauna and Norwegian BBQ hut.
Well-located for schools, colleges and the town centre, this contemporary thatched cottage offers flexible living space with six bedrooms.
Built in 1907, this four-bedroom Edwardian period home has been refurbished by the current owners, retaining many original period features.
Surrounded by landscaped gardens, this five-bedroom home offers living space across three floors.
This lovely country home in Burnham Market is currently run as a popular holiday cottage, with five en suite bedrooms and colourful gardens.
This three-bedroom 17th-century former village bakery is just a few miles from the East Sussex coast.
Set on a landscaped plot, this light and airy four-bedroom home comes with a log burner in the lounge, a fitted kitchen and an open-plan ground-floor layout.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Built on a former chapel site, this impressive four-bedroom home boasts balconies, stunning views and contemporary modern living.
This three-bedroom house is situated in a quiet mews and set over three floors. Features include glazed staircases and high ceilings.
A period townhouse set over four floors, this five-bedroom home was built in the 18th Century and retains many original features.
With five bedrooms, this spacious home offers beautiful gardens and modern interiors - set within the popular market town of Bingley.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This first-floor flat comes with two bedrooms, an impressive open-plan reception room and two lovely roof terraces.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Moored at Taggs Island and reached via a pretty garden, this two-bedroom houseboat has a vaulted reception room and skylit garden studio - currently a beauty salon.
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
A contemporary house spread over three storeys, this three-bedroom detached home has large sliding doors that open out to the River Quaggy.
Moored in Chelsea's Cheyne Walk, this houseboat offers two double bedrooms and a teak deck that's ideal for al-fresco dining.
This former village bakery, dating back to the 17th century, is now a three-bedroom detached home just a few miles from the East Sussex coast.
On the picturesque Isle of Man, this four-bedroom character home has a ground-floor shop that's currently run as a newsagents and a flat that would make an ideal holiday let.
In a new collection of flats, this first-floor two-bedroom apartment offers ample entertaining space and a prime view of Furze Green from a private balcony.
This three-bedroom stone-built cottage currently trades as the village store with a restaurant in the annexe and family accommodation on the upper floors.
Previously two semi-detached properties, this five-bedroom home is spread over three floors with a large breakfast kitchen, orangery, office and gym on the second floor.
This five-bedroom home enjoys countryside views over the Blyth estuary to Southwold, offering flexible living space with a ground-floor annexe - ideal for use as a holiday let.
Close to the market town of Eye, this four-bedroom detached home offers a double-height living room which takes the place of the original, 19th-century, chapel nave.
Dating back to the 19th century, this four-bedroom home needs modernising. Spanning three storeys, the red-brick house has a fireplace, a small terrace and a cellar.
Just outside of Cambridge, this single-storey home offers three double bedrooms, a living room with vaulted timber ceiling and ladder steps that lead to a mezzanine study area.
This six-bedroom Georgian home is on three floors with open fireplaces, a two oven Aga, an annexe, and cottage gardens with outbuildings and a car barn.
A former coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, an attached office, kennels and an outbuilding that's currently used as a gym.
Located beside an impressive Victorian viaduct, this four-bedroom home has an open-plan living area that is glazed on two sides, with skylights and high ceilings.
A former furniture workshop, this three-bedroom home has high ceilings and painted brick walls, in a village setting only fifteen miles from the coast.
This five-bedroom stone townhouse features a pine staircase and an Inglenuk fireplace, double doors from the lounge give access to an enclosed courtyard.
This five-bedroom, detached home blends traditional and modern design; the sleek kitchen features a gas hob and oven set within an exposed chimney breast.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.