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THE COST OF XMAS: Avoid Christmas debt hangovers
AT the Citizens Advice Bureau the Christmas rush starts in late January and runs flat out until spring.
Some clients are frightened, some bewildered, some angry and many reduced to tears.
What all have in common is that their festive celebrations have come back to haunt them, and the spectres are letters and sometimes phone calls demanding payment.
Swindon Citizens Advice Bureau personnel readying themselves for the next post-Christmas surge include debt case workers Angie Smith and Alison Palmer.
“People’s budgets have become much tighter with the recession,” said Angie. “Although they might just about be able to pay for everything, obviously at Christmas there’s pressure to provide presents.
“This is additional expenditure that people very often find difficult to meet out of their normal income, so they have to find another source.”
For a person with reasonable credit, that source might be a credit card or bank loan; for a person with poor credit it’s more likely to be a doorstep lender or payday loan firm who’ll charge higher interest to cover the greater risk of default.
The problems come when people are unable to meet their repayments and face spiralling additional fees, demands for immediate payment and threats of court action. The best way of preventing all of this from happening, the experts say, is to be aware of household income and outgoings down to the last penny before even considering borrowing. It sounds simple, but it’s easy to overlook amid the other concerns of day-to-day life.
Alison said: “Everyone should have a budget and should understand their budget. One of the things we’re shocked about is the number of people coming to us with financial difficulties who have no clue as to their income and expenditure. Every-thing else relies on that.
“It’s possible by establishing a budget early in the year to plan for what you might like to buy at Christmas.”
For people on low incomes in particular, credit unions are excellent places to put aside small amounts each week, building to a tidy sum once Christmas rolls around.
The key message from the advisors is that people should be proactive. Angie said: “We’re not in the business of telling people what to do with their money. It’s about taking control. We’re in the business of empowering people to help themselves.”
And those who do find themselves in difficulty? The most important thing is for them to seek advice as soon as they know there’s a problem. The worst thing to do is ignore letters from creditors or leave them unopened.
It is also important to remember that agreements can often be reached with those creditors, and that the Citizens Advice Bureau can help.
Alison said: “Some people have a feeling of being overwhelmed. They’ve got themselves into a state and they can’t see a way out, but there’s always a way out of it. The sooner you come for advice, the better.”
Extensive information about debt problems can be found at the bureau’s online advice guide, www.adviceguide.org.uk. The Swindon branch can be contacted on 08444 994114.