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; request a free guide on NISAs from Hargreaves Lansdown
- 1 Rihanna 'nude photos' claims emerge on 4Chan as hacking scandal continues
- 2 Frank Lampard equalises for Manchester City against Chelsea: how Twitter reacted
- 3 Kim Kardashian 'nude photos' leaked on 4chan weeks after Jennifer Lawrence scandal
- 4 Free U2 album: How the most generous giveaway in music history turned PR disaster
- 5 Britain First picture: Photographer 'horrified' after first Afghan policewoman killed by Taliban used for 'ban the burka' campaign
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
Archbishop of Canterbury admits doubts about existence of God
iJobs Money & Business
£80 - 100k + Bonus: Guru Careers: A COO / Chief Operating Officer is needed to...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
Day In a Page
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize