How much did that Christmas present really cost?
In 2010, it seems one in five people went into debt to pay for the presents, turkey and all the trimmings. This year, it's estimated households spent £835 each. If you don't have savings to draw on, could you end up going into debt too?
Many people budget for the additional expense of Christmas, with some starting in January. But even this might not be enough if you're one of those people who like to spend a lot on presents for other people, even if it means getting into debt. Once you've accounted for the interest, you could be paying far more for all those stocking fillers than you bargained for.
Debt isn't necessarily a problem. Many people have credit cards, overdrafts and personal loans. But what would you do if you began to struggle with repayments?
Here are some of the debt 'warning signs' you should look out for, provided by Debt Advisory Centre, who also wrote this article.
Warning signs of a debt problem
- Struggling to afford your credit card or loan repayments.
- Unable to make more than minimum payments towards credit cards.
- Personal debts growing, but you're not sure where the money is going.
- Struggling to pay household bills.
- Income not enough to cover your regular expenditure.
- Regularly borrowing money but not sure how to repay it in full.
What to do if you have a debt problem
Trying to borrow your way out of a debt problem isn't the answer.
If you're worried about your debts, you need to sit down and draw up a budget: figure out exactly how much is coming into your household every month and where it's all going.
The easiest way to do this is by adding your bank and credit card accounts to free money manager Money Dashboard. Most of your transactions will be automatically tagged and organised, and you’ll be able to see where your income is coming from, and where your spend is going.
This will help you understand what you can afford to spend each month without borrowing. It'll also help you figure out ways of cutting back on your spending, whether that means buying 'value' products in the shops, finding a better deal on your utilities, cycling to work…
Everyone's situation is different, but there are bound to be a few ways you can cut back and try to spend less than you earn. Once you're confident your debts aren't getting any bigger, you can really start working on making them smaller.