Avoid the holiday season financial hangover
South Africans spent over R10 billion during the festive season last year. This year ooba suggests carefully planning your holiday season spending to avoid a financial hangover in January 2009.
"Festive season debt can take months to pay off in the new year," says Jenny Rushin, Provincial Sales Manager for ooba (formerly MortgageSA). "We suggest planning your holiday this year carefully to minimise the financial impact but still have an enjoyable holiday season."
Consumer spending over the holiday season represents more than 20% of retailers' annual sales.
"Retailers depend on the holiday season for sales and encourage consumers to spend money they don't have," warns Rushin.
Rushin proposes a few money saving tips this holiday season.
First and foremost give yourself a gift and pay off your bond.
"People often make the mistake of depending on their 13th cheque to finance their holiday or pay-off post-holiday debt," says Rushin. "Especially in a year where money is tighter."
But, the old advice of putting at least some of it away into your bond still applies.
"A R20,000 lump sum deposited into a million rand bond will save you R264 245 in interest over the loan period assuming that your interest rate is 1.5% below today's 15.5% prime interest rate," says Rushin. "This means you will save more than 13 times the original amount as well as cutting your repayments to 18.1 years on a 20 year bond.
"If you haven't booked your Christmas holiday, flight or car hire, by now, seriously consider staying at home this year and put money aside for a longer trip next year." suggests Rushin.
Flights, car hire and accommodation are exponentially hiked up over the holiday season and last minute bookings can cost more than one and a half times the original price.
"Never use your budget facility on your credit card, especially to pay for goods such as food," warns Rushin. "Although the minimum monthly repayments may be lower than on straight, the interest rate is far higher and you do not have the option to pay it off quicker, so are stuck with the debt for at least 6 months."
Rushin says, "Rather than planning a financial budget in the New Year, when the damage is already done, plan a budget now which will result in sensible spending over the holiday period." Try and list what your biggest expenses will be such as gifts, food, travel and any other potential expenses. While you may go over your budget, the act of planning creates awareness and you are less likely to overspend.
Another money saving technique is to start buying presents now, rather than a few days before Christmas where the urge to grab anything off the shelf usually results in expensive and thoughtless gifts.