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7 Tips to Avoid a Christmas 'Debt Hangover'

The following article is a guest article contributed by online debt advice provider, MoneyNerd.

A young girl sits in an armchair wearing a red Christmas jumper. She has her hair tied in braids with reindeer antler hair bobbles. Her dad is crouched down next to to the armchair and laughs while he passes the child a small wrapped gift. A Christmas tree with red baubles is in the corner.

Christmas should be the most wonderful time of the year, not a time for getting into debt that you’ll struggle with for the next 12 months.

A time of happiness and joy can be ruined by worries about overspending and debt. Even if you’re usually careful with money you could lose your way in December.

We all want to buy the best gifts for other people. We want to prepare memorable meals and give the children a magical experience. It’s so easy to get swept up by the excitement of Christmas and spend more than you actually should.

To fully enjoy the festive season, without money worries in the back of your mind, here are seven tips to help you have a debt-free Christmas celebration:

1. Be organised

Start your Christmas planning early and take your preparations seriously. Plan for each Christmas the same way you’d plan for a wedding or another big occasion. Spreadsheets aren’t exactly the height of festive fun but they’ll help you to stay in control.


Create a detailed Christmas budget. Ideally, you’ll get this started long before you start shopping. You can add in how much you intend to spend on gifts as well as creating categories for festive food, decorations and celebrating. Then all you need to do is remember to stick to your budget.

Whenever you spend, mark it in the right place on your budget. If you use a spreadsheet, automated calculations can help you see how much is left to spend.

Write Everything Down

If you’re borrowing money to cover Christmas costs, make sure you write everything down. Record how much you’ve borrowed and where you’ve borrowed from, as well as any scheduled repayment dates. Carefully recording the money you’ve borrowed can help you plan how you’ll pay it back.

Use an Online Calendar

Use Google Calendar (or an online calendar of your choice) as a way to keep track of payments. Mark each Direct Debit or repayment date, so you can easily see what’s due to come out of your bank account.

2. Keep things simple

Christmas doesn’t need to be extravagant, so only borrow money if you genuinely need to. Wherever possible, pay outright with cash or your debit card.

Even store cards can be tricky at this time of year. You may intend to clear the debt within a month but Christmas celebrations can be very distracting and lead to interest charges for late payments.

3. Don’t forget the monthly bills

Real life doesn’t take a Christmas break. Whilst you’re shopping for gifts and choosing a turkey, don’t forget your everyday bills.

Christmas spending is extra spending, on top of what you pay every month. Your usual monthly budget continues to apply, so don’t forget your Direct Debits and other monthly payment commitments.

4. Don’t bank on an overdraft

Overdrafts are very expensive. In fact, they’re amongst the most expensive forms of borrowing. If you haven’t already been approved, there’s also a chance you won’t get one. Don’t assume that an overdraft will get you through December successfully.

Overdraft interest rates can be as high as 40%. Even spending just £100 could result in you being charged more than £3 after your first month. That might not sound like much, but those charges will quickly add up. The more you dip into your overdraft, the more you’ll have to pay back.

5. Shop around

Are you someone that takes their time or do you like to zoom around the supermarket throwing everything into a trolley?

Particularly at Christmas, time is money. Different stores charge different prices, so shopping around is a very easy way to save money on your Christmas purchases. Don’t be afraid to visit several different shops and find the best prices for your products. You can even compare prices online, from the comfort of your bed, before venturing out into the cold.

Buying offline can be more cost effective, as you’ll avoid any hefty delivery charges but don’t be afraid to browse several websites or use price comparison sites to know exactly where to go for the best deals.

6. Do your own credit checks

If you are going to use a credit card, compare the terms and conditions. Decide which credit card is best for you, rather than relying on the first card you’ve seen advertised.

Some cards have lower interest rates than others. The better your credit score, the more likely you are to be approved for a lower interest card. If your credit history isn’t the best, it’s likely that you can only access credit cards with very high interest rates.

There’s a chance that you might be better served by a card with a higher interest rate and an interest free period. If you’re confident that you can repay your debt before the interest free period runs out and if you know that you won’t be tempted to use your card after Christmas, you could potentially use a credit card without incurring any extra costs. After Christmas, clear your debt and then cancel the credit card completely.

7. Manage expectations

Often, our Christmas overspending is driven by feelings of guilt. We spend more than we have because we don’t want to let other people down.

You can manage expectations by being up-front about what you (or Santa!) can afford. Everyone struggles financially at some point, so people will be very understanding. Explain to children that they can’t have everything they’ve put on their Christmas list. Cheaper items from budget shops, can bulk out a pile of Christmas gifts very easily.

At home, emphasise the fun of Christmas rather than materialistic gains. Often children don’t remember specific gifts they received but they’ll grow up with happy memories of Christmas traditions. Some of the best things in life are free, like evening walks to see the local Christmas lights or conversations over Christmas dinner.

How to implement these tips

Christmas can be an expensive time of year. It’s easy to say ‘don’t spend more than you’ve got’ but harder to turn that

into reality. Instead of trying to be perfect, simply make a few small changes to reduce the feelings of guilt, stress and overwhelming debt. If you can, avoid using credit to pay for your Christmas celebrations. If you really must resort to credit cards and overdrafts, do your research and plan how you’ll pay things back.


About MoneyNerd is a personal finance blog that was set up with one aim in mind: to help people learn how to manage their finances and tackle debt. We provide a variety of straight-talking articles that cover personal finance topics from credit card guides to mental well-being tips. These can help you understand exactly how financial products work, as well as what your rights are when dealing with debt. We want to offer authentic and truthful information that can help you deal with your situation, whatever that may be.

About Freeze Debt

Freeze Debt is the first debt advice and solutions app helping UK users to take their first steps towards a debt-free future. Our free service provides those struggling with unmanageable debt a confidential space to speak openly about their debt and financial worries and find a suitable solution based on their personal circumstances.

Freeze Debt's in-app messaging service is a revolutionary and modern way for users to address their debts and find solutions in less than 5 minutes, compared to the traditional and uncomfortable ‘call-centre-model’ that can take an average of 45 minutes.

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