Managing merriness: how did you spend Christmas?

An article by Melanie Taylor of Gregory Pennington, a leading UK Debt Managemant solutions company:

After a cautious start to December, UK shoppers indulged in a last-minute burst of spending for the Christmas season – which many are paying for as they enter the New Year.

Children aren't the only ones who have a hard time waiting for Christmas. For retailers everywhere, it's the most important time of year – the time when shoppers are most likely to throw caution to the wind and really splash out. In 2006, for example, December's credit card borrowing accounted for 60% of the annual total.

So the retail industry held its breath as we approached Christmas 2007 with shrinking disposable incomes and credit increasingly hard to come by. Some analysts thought that financial uncertainty would lead shoppers to cut back on their Christmas spending. Others predicted they'd be more likely than ever to treat themselves during this once-a-year festival of good living and bad judgement.

It turned out that the second group was right, largely thanks to a last-minute burst of spending. According to MasterCard, Christmas shoppers spent 3.8% more in 2007 than in 2006 – the biggest increase in the last three years. Market research firm IMRG reported that 4.4 million people went shopping online on Christmas Day itself, spending £84 million, or 269% more than last year! And according to Experian's Retail Footfall Index, numbers of Boxing Day shoppers were up 25.1% compared with 2006.

Now that the party's over…

Poor start to a New Year

For some, a penny-pinching New Year is a price worth paying for all the festive celebrations. Others find that a few days of fun simply cost too much, and promise themselves they'll cut back this year – the Christmas season can be a valuable wake-up call, emphasising the need to stop living beyond our means and get our debts under control.

For increasing numbers of people, paying for Christmas is more serious than a few hefty repayments. Fees for unauthorised overdrafts, charges for bounced payments, maxed-out store cards with interest rates of 25% or more – it can all add up to a lot of money and a lot of hassle. A MoneyExpert report found that 10% of almost 2,000 respondents were still paying off credit card debts from Christmas 2006 as they entered December 2007!

Why do we do it?

Why do so many of us feel compelled to blow our budgets at Christmas? Advertising? Experts reckon that marketing during the festive season cost around half a billion pounds. Peer pressure? 47% of CreditExpert's respondents felt there is social pressure to buy expensive presents. Or is it simply a feeling that we owe it to our partners, to our kids, or to ourselves?

Resisting the urge to splurge is never easy, especially in a society that's grown more and more used to easy credit – but whatever the reasons, it's the individual who decides what to spend, and the individual who foots the bill. A bit of self-control can save us from a serious financial 'hangover' when the party's over.

One thing's for sure: a lot of people would be enjoying a better start to the New Year if they'd spent just a little less enjoying the end of the old one.

Article Credits:
Melanie Taylor is associated with Gregory Pennington. For more information about debt management, debt advice, Individual Voluntary Arrangements (IVAs), basic bank accounts with a debit card facility, loans and remortgages, please visit http://www.gregorypennington.com/