- 14 Dec, 2017

2017 Christmas Spend to Top $50 Billion – Avoiding the Debt Hangover

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Retail groups are predicting that Australians will spend up to AU$50 billion this year between November 15th to December 24th. Scary isn’t it? But, the reality is many Australians tend to Christmas spend without considering the consequences. Now while this sounds like fun, it can also lead to months of financial stress after Santa and his sleigh return home to the North Pole.

The Predicted 2017 Christmas Spend

Australian Retailers Association

According to the Australian Retailers Association (ARA) and Roy Morgan Research, Australian’s will burn a AU$50 billion hole in their wallets this Christmas. But here’s the kicker: this year’s Christmas spend is expected to top 2016 figures by 2.6%. This information centres on Christmas pre-sale data, which is as follows:

Christmas Spend Comparison
Goods 2016 Actual ($mil) 2017 Forecast ($mil) Predicted Growth
Food 19,643 20,284 3.27%
Household Goods 8,503 8,704 2.37%
Apparel 3,869 3,890 0.54%
Department Stores 2,928 2,957 0.99%
Other 6,911 7,184 3.96%
Hospitality 6,854 7,052 2.89%
National 48,708 50,073 2.80%

Source: ARA/ ROY MORGAN.

 

Growth by State
State 2016 Actual ($mil) 2017 Forecast ($mil) Predicted Growth
NSW 15,692 16,265 3.65%
VIC 12,267 12,742 3.87%
QLD 9,838 9,951 1.15%
SA 3,164 32,66 3.23%
WA 5,386 5,434 0.89%
TAS 967 996 3.01%
NT 499 508 1.77%
ACT 895 911 1.76%
National 48,708 50,073 2.80%

Source: ARA/ ROY MORGAN.

What’s the bottom line? Well, the Australian Retailers Association say that Australians love Christmas. So much so that we are giving-centric, and this can sometimes blur our judgement and stretch our budgets beyond breaking point.

The Pros and Cons of the Christmas Spend

Sure, it’s great to spoil those you love. But, do you really need to blow the finances to show them how much you care? Let’s look at the benefits and disadvantages, and you decide.

The Benefits

  • Family Get-together – For many people, Christmas is that one time of the year that they get to see the majority of their family. It’s a time to catch-up and share. Of course, this can mean having to buy more gifts, but that’s half the fun isn’t it?
  • Enjoyable Sharing Gifts – There’s nothing more enjoyable than watching someone’s face light-up when they open a surprise gift. Sometimes it’s not the actual gift received, but the thought that’s gone into buying a gift that is memorable.
  • A Time to Thank Those You Love – Sharing Christmas and gifts is a beautiful way to express your gratitude to those you love. This gesture extends not just to your immediate family, but beyond, to relatives you may not have seen for years.

The Disadvantages

  • Greater Expense – While Christmas is a time to enjoy family and friends, it can also mean that costs escalate, especially if you’re hosting a feast. Apart from the cost of gifts and food, there’s also drinks to consider when having a Christmas party. These can blow the budget big time.
  • Not Everyone Gets Along – When big get-togethers happen and alcohol and festivities are involved, often people’s true colours become pronounced. Therefore, this can mean that you’ll see a different side to relatives, friends and even colleagues, which can lead to disputes.
  • More Mouths to Feed – Big gatherings often mean more mouths to feed. So, your simple weekly shop can become a full-blown expedition for an army, and this can be costly.

So, how can you avoid making a New Year’s resolution to pay off your Christmas spend?

Ways For You to Avoid an Extravagant Christmas Spend

There are some relatively simple ways for you to avoid spending too much this Christmas. Here’s the deal:

 

Pre-Plan Get-togethers – If you’re hosting a Christmas party, then get each family member to bring a dish and their own drinks with them. Pre-planning the menu and then designating a food item – salad, pasta bake, potato bake, dessert, or meat – for a family member to bring means that you need to buy and also prepare less food. Plus, it adds variety to the selection of foods that you can put on the table for guests. Also, by asking guests to BYO drinks can save you a fortune. Otherwise, you’ll need to buy alcohol and soft drinks, which can quickly add up and push your budget over the edge.

christmas-feast-dishes

Set Yourself a Budget – Work out how much you can afford to spend, then break this down into a gift and food budget. Just remember, spending more on someone doesn’t mean that they’ll appreciate you more. So, if you can get away with making hand-made soaps, chocolates, rocky road, or cookies, then consider these as a gift option, rather than a bigger item that will shred your budget.

 

Limit Your Pressie Spend – Once you’ve set a specific budget, then don’t stray from this. If you’ve got a large extended family, a Secret Santa can be an excellent way for everyone to receive gifts without too much added expense.

 

Give Gift Coupons – Home-made coupons that rent out your services are an excellent way for you to save a fortune this Christmas. For example, you can give your partner a ‘massage’ coupon, your mum a ‘day off from house cleaning’ voucher and your sister a 1-week ‘ironing wiz’ coupon. These will cost you nothing more than your time, devotion and the paper and ink for printing the voucher.

 

Buy Second-hand – If you know a family member or friend who wants a particular item that costs too much, then consider buying it second-hand. For instance, let’s say your mum wants a new hallstand. But, those you’ve seen in the store are worth hundreds of dollars, which is way out of your budget. So, you look on Gumtree and find a second-hand timber one that’s ideal, it just needs a little love. So, you purchase it, take it home and restore it. By the time you’ve finished the hall stand it looks better than new. Want to know the best part? The hallstand is now the exact colour to match your mum’s decor. But, the cost was inexpensive.

buying-second-hand-gifts

Collectively Buy a Gift – If a family member or friend is saving for a special item, then consider asking everyone in the family to contribute what they can to purchase this item. If you have enough, then buy the item and then give this to the person as a gift from the family. However, if you don’t quite have enough, then give the person the money as a gift towards the item, or buy a gift card so they can buy it later.

 

Be Resourceful – If you’ve got talents, then use these to the best of your ability. For instance, those good at playing music or singing can record a song especially for a friend or family member. They can then give this to them as a gift at Christmas. Other cost effective, resourceful gifts include:

  1. Picking flowers from the garden and making a floral arrangement.
  2. Grabbing a selection of the finest produce from the veggie patch and making a gift basket.
  3. Sewing a throw for the bottom of a bed that a relative will cherish.

 

Think Small – Often little gifts show the recipient that you care, but at the same time they stop you from overspending. So, instead of blowing a fortune, think about the recipient of the gift. Write down what their favourite items are, then centre your gift on one of these. For instance, if your dad loves Pascall Pineapple Lumps, then buy a packet, and a pineapple shaped jar. Fill the jar with the Pineapple Lumps and then wrap it. This gift will cost you less than $20. Plus, it shows your dad that you cared enough to get him something he loves.

 

Shop for Unusual – Quirky little gifts exist everywhere, and they’re relatively inexpensive. So, pay close attention to what a relative or friend collects. Some people love unusual items such as vintage glasses, or they collect ornaments. If they do, then buying a gift for them becomes relatively easy. To find a unique item search on Gumtree or visit obscure shops situated in markets and other quirky locations.

 

Start Planning for Next Christmas – Those of you who have found this Christmas tighter than you would have liked, need to start planning for next Christmas as soon as possible. A great way to do this is by using your mortgage redraw facility. You can then pay extra off your home weekly, over the next year (say $10, $20 or $30). Then by the time next Christmas rolls around you would have put $520 to $1560 away, which would have reduced the amount of interest that you’ve paid. Of course, if you use your redraw facility, you just have to be mindful that the amount you withdraw adds to your mortgage balance and this will increase your interest repayment.

 

Another possibility is to buy gifts for next year when they have the post-Christmas sales. These sales are usually on in January and allow you to bag bargains. Just remember to write out a gift list and to stick to your budget when buying. This strategy will prevent you from spending more than needed.

Don’t Forget Your Mortgage in the Christmas Spend

Often, we get so caught-up in the hype of Christmas that we can sometimes forget about our other obligations. Therefore, it’s important to factor in your mortgage cost over the festive season, especially if you’re on annual leave over this time. The best way to achieve this, is to calculate just how much money you’ll have over Christmas, less your expenses – mortgage, car loan, food, petrol, bills. Also, make sure you set some money aside for those unexpected costs. What you have left is how much you can realistically afford on the Christmas spend.

Are you looking to give your home a Christmas gift this year with a home loan for under 4%? If you said yes, then contact eChoice. Our brokers have access to 100’s of home loan products. So, we’ll find you the right mortgage.

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