How you can recover from your Christmas debt hangover


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The festive season is all about over-indulging and our physical health can take a beating, but with one in five Aussies struggling to meet basic household expenses in the wake of holiday overspending, it seems our financial health doesn't escape unscathed either.

The MyState Bank research also found that nearly half of us don't budget for festive expenses such as gifts, food, alcohol and decorations.

"The cost of buying gifts, entertaining and travel can really add up, leaving many people struggling to meet basic household expenses when January comes around," says Heather McGovern, MyState general manager of digital and marketing.

christmas hangover

On top of that, a third of Australians anticipated spending more than they could afford during the festive season, while a fifth were willing to take on more debt to cover all the extra expenses.

"Our research revealed that many Australians are willing to go into further debt to ensure they have a happy festive season. This indicates the considerable financial pressure many Australians are feeling at this time of year," says McGovern.

This is not to say Aussies don't try their level best to manage holiday spending. Over half buy gifts in advance, 40% scan supermarket catalogues to find the best priced items, 40% use discount or coupon codes when shopping online and a quarter share the cost of catering with friends and family.

According to McGovern, putting aside a little each month can help ease the pressure of the holiday season.

"For some, saving can be difficult. Setting up an account at the start of the year and then automating a transfer on a regular basis means you can get to the end of the year without really feeling it - even $20 a week adds up to more than $1000 come Christmas time."

Meanwhile, a recent Finder survey revealed that 37% of Australians - or 7.2 million people - will still be repaying their Christmas debt well into 2020.

Though the majority of Aussies will repay their debt by the end of February, one in four will take up to five months to pay it back.

Forty per cent of Aussies will rely on their savings while 11% will consolidate their debt and switch to a balance transfer card.

Kate Browne, personal finance expert at Finder, suggests these two debt-busting tips:

1. Work out which debts cost the most in fees and charges and work to pay them off first or move them to a cheaper facility as soon as possible.

2. Opt to move the outstanding balance to a zero-interest credit card or balance transfer credit card. "If you have debt spread across multiple cards or loans, you'll be paying interest under multiple rates and this can be costly," says Browne. "Balance transfer credit cards allow you to consolidate your debts into one place. They offer a low or 0% interest rate on any existing debts you transfer from another account or card. This can help cardholders to tackle their debt sooner and save big bucks on interest in the long run."

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David Thornton was a journalist at Money from September 2019 to November 2021. He previously worked at Your Money, covering market news as producer of Trading Day Live. Before that, he covered business and finance news at The Constant Investor. David holds a Masters of International Relations from the University of Melbourne.

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