Dreaming of a tight Christmas
The strategy To keep my head above water this Christmas.
How do I do that? There's no doubt many people are finding the financial situation tough. Lower interest rates and petrol prices may have provided some welcome relief but as the economy slows, things are likely to get worse before they get better. The last thing you need is to blow the budget over the silly season and find yourself in strife as a result.
That means approaching this holiday season with a more disciplined approach. Credit Union Australia acting chief executive, Rob Nicholls, says consumers should set a budget for how much they can afford to spend rather than racking up big credit card bills to be paid off later on. Make a list of what you want to buy before you go shopping. Nicholls says people are less likely to impulse-buy if they've written it down first. Try to work out a budget for each item on your list and shop around for the best price. Retailers have been doing it tough too and the odds of finding a better deal have improved as a result.
Be realistic about what you can afford, Nicholls says, especially if you're putting it on credit to be paid for later. In fact, Nicholls says it makes sense to have a strategy in place to manage debt before hitting the shops this festive season.
What sort of strategy? By having a realistic picture of how much you're likely to spend, you can choose the most efficient way of using credit. If you know you can pay off your credit card when it's due, Nicholls says you can make good use of any interest-free period.
But if you're likely to take several months or more to pay off your Christmas spending, it may be better to use a card with no interest-free period but a lower interest rate.
If you're prone to bingeing, Nicholls suggests asking your card provider to reduce your credit limit. It sounds drastic but not having excess credit available removes the temptation to overspend.
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