By Sarah Kempson
The festive season had barely begun when the text messages and emails started… ‘This is a courtesy message from (insert bank name here) to advise that your credit card payment in now overdue.’ Yep, I was just a week into the seasonal spending when my not-so-platinum card coughed, sputtered and gave up – leaving me high and dry at a time when I most needed its magical ability to conjure goods without cash. I know what you are all thinking – she is the budget columnist, surely she should know better? How can all this advice she is giving us mean anything if she can’t follow it herself? The basic premise that no one is perfect, least of all me, rings true; that the best laid plans can sometimes go awry without careful consideration of all the ‘what ifs’.
In the lead up to Christmas this year, I discovered a lot of ‘what ifs’. November seemed to have been christened the month of the bill and a lack of preparedness left me worried about Christmas even before the trees and lights went up. Electricity, Gas, Water, Car Insurance, House Insurance, Rates, Healthcare and Rego all rained down on me and while I signed my life away on every credit card slip, my cash flow seemed to have all but dried up. Come December, the Christmas gift list came out and I took to the stores, ideas at the ready, only to discover that after one good day of bargain buying for family and friends I had little leftover for food for the rest of the month.
My dilemma is repeated all over Australia at this time of year. Seemingly sensible individuals are overwhelmed with the present giving and party season – things get out of hand. While year round they are budget babes and cheap Charlies, Christmas is like garlic to a vampire, cutting you down in your prime. We need to remember that Christmas is a full time extravaganza and not just a seasonal blip on the radar. Those last minute bills in November will have you paying festive debt ‘til the Christmas in July turkey hits the table, and even then we don’t think about starting for the next one until it’s too late.
I have recently covered Christmas and New Year in this column and how to do it on the sly, but what about the January hangover that your credit card experiences? Bacon, eggs and a bloody Mary won’t fix this one – chances are you won’t be able to afford breakfast out anyway. So what to do?
Rule Number 1 – Stay away from the sales. Boxing Day, Stocktake, End of Lease, End of Year, Start of Year, Anything – Stay away. If you don’t go, you can’t possibly find something you ‘need’.
Rule Number 2 – Clean out. You probably received a bevvy of wonderful gifts from your nearest and dearest. Get rid of the old, replace with the new. How many times have you put those socks from Nana in the linen press until you need them, only to forget you had the ones in the linen press and bought more anyway?
Rule Number 3 – Clean up. Ebay is your best friend after Christmas. If making space for your new stuff gives you enough stock to open your own store, it’s time to sell some. Listing can be time consuming but if you do 5 pieces a night, once a week, it will be a steady income that you didn’t have before. Put it all on your card until the debt is paid off, then keep going for extra pocket money.
Rule Number 4 – Pay Rise? Lucky you! Some companies use the New Year as a time to reassess salary or introduce a minimum increase to fit with the CPI. It might only be 2% or 3% but you didn’t have it before. Put it all on the card.
Rule Number 5 – If you overindulged over Christmas, spend a minimum two weeks not drinking or eating out. Instead meet friends for a walk in the park or make them a coffee at home. You will feel healthier and so will your credit card debt.
Credit card debt won’t disappear overnight, nor will the issue go away if you don’t take the time in January to plan for the rest of year. Make a note of when your quarterly bills are due, what months the insurance will hit and remember heaters mean high bills mid year and air cons towards the end. Establish which companies charge you more for pay by the month and what services may not be absolutely necessary (gym membership you never use, anyone?)
Work out a savings plan. People have forgotten that’s where you put a particular amount of your salary away every month. Remember having a dollarmite account as a kid? Grown ups can have them too – nowadays we use ING Direct for their brilliant interest rates and simple online solutions. Visit your current bank branch and see what they can do for you. Consolidate accounts, minimise fees, get a better rate – if you don’t ask, you won’t know, and it never hurts to tell them you are shopping around either.
Now, envision December 2010: a debt free Christmas that you can enjoy wholeheartedly without the underlying stress that we usually suppress until January. A credit card, though still not platinum, that shines with health and vitality rather than the dulled pallor of an overused swipe strip and eroded signature panel. Enjoy your eggnog today and your bloody Mary tomorrow.
Merry Christmas and a Happy New Year to all the platinum readers – I look forward to more adventures and saving with you in 2010.
