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Yes, it’s that time of year again, when the kids start to write out their Christmas present lists and a large number of parents start to panic slightly as to how they are going to pay for this year’s celebrations, on top of all their existing commitments such as their home owner loan, regular household bills and personal loan repayments.

This year has been particularly tough for many families in the UK, with inflation growing at an alarming rate, coupled with high food and fuel costs, whilst wages have remained stubbornly static, or even decreased.

Despite all the recent doom and gloom, most families still like to push the boat out when it comes to Christmas time and in far too many cases, the expense gets forgotten about and people spend money on credit cards and loans, with little regard as to what is likely to happen in January and to how they will be able to make the additional debt repayments.

A large percentage of the population are likely to use some form of credit to pay for their Christmas festivities, whether this is in the form of credit or store cards, a personal loan or even an expensive short term loan from a doorstep lender, or a pay day loan, for example.

A recent survey form the high street bank HSBC, has found that somewhere in the region of 21 per cent of the UK population will use credit cards to pay for Christmas. A further 13 per cent are likely to dip into their overdraft facility, whilst 3 per cent will take out a personal loan and a further 2 per cent will opt for a pay day loan.

Whilst this may seem like a good short term solution to a problem, many people will take out a loan in desperation, in order to have some spending money now, without giving much thought as to how this loan debt is likely to be repaid in the New Year.

The HSBC survey found that the average person is likely to spend an additional £560 on their Christmas celebrations this year and whilst his may not seem like much to some people, for others, it could be just enough to tip them over the edge into financial hardship, bad debt and loan arrears.

So, if someone is struggling to make ends meet financially and is wondering how on earth they are going to survive Christmas without taking out new loans which they can’t afford, what can they do to try and soften the financial blow?

The first thing to do is to plan a budget and wok out exactly how much spare cash there is to pay for things. Once this has been worked out, a list of Christmas presents for people should be made up, bearing in mind the amount of budget there is to work with.
When going out shopping for presents, stick to the original planned list and try not to get carried away with impulse purchases, this is a great way to spend over your budget and shops are very good at preying on shoppers’ weaknesses in this area.

By starting Christmas shopping early, the total cost of the festivities may be spread over several weeks, or even a few months, which could help to ease a person’s budget significantly, as the cost could be spread over several pay day periods.

Even with the best budget plans in the world, some individuals will still end up using credit to pay for Christmas, either through credit cards or a personal loan. If this is the case, then potential borrowers should be careful about how much credit they take and how they are going to repay their loan debts.

Shopping around for a new credit card or a cheap loan, could end up saving a small fortune in interest payments over the term of the loan and individuals should not fell as though they have to use their existing credit card or go to their usual high street bank for a new personal loan, as these may not necessarily be the cheapest option on the market.

For credit card customers, there are several cheap credit cards which offer low interest rates, or even an interest free introductory period, many of which will also allow a balance transfer from more expensive cards, thereby lowering monthly outgoings in the New Year.

Similarly, for someone with several small personal loans with relatively high interest rates, a debt consolidation loan could be a realistic solution, offering a cheap loan alternative to expensive loan debts, as well as providing some extra cash to help cover the cost of the festive period.

If someone is planning to take a personal loan out to cover the cost of Christmas, they should be very careful to ensure that adequate plans and funding are in place to meet the loan repayments once they commence in the New Year.

Whilst it may be tempting to take a loan out over a longer term in order to reduce the monthly repayment amounts, this could lead to long term loan debt problems, as people who take a Christmas loan out this  year, are likely to do the same next year and the year after. It is therefore important to try and repay any Christmas debts within the next twelve months, so that the situation is not made even worse in twelve months time.

Of course the best solution for someone who finds themselves in the situation of looking for a Christmas loan every year, is to plan and prepare for next Christmas as soon as they get to January.

By disciplining themselves into putting away a small amount of cash on a regular monthly basis into a suitable savings account, the cost of Christmas can already be covered by the time they reach next December and the need to take out yet another personal loan can be avoided altogether.