Christmas can be a brilliant, but costly time. From buying presents to heating bills, the festive period can mean that pay checks need to stretch further than usual and people often seek out loans to help. Last Christmas, Britons ran up the highest level of debt that the country has seen in seven years, according to the Bank of England. Borrowing on credit cards and overdrafts hit a massive £1.25bn. So what can you do to ease the strain after this financially difficult time? We want to help.
Dealing with debts after Christmas
1. Understand your debt repayment
To deal with the cost of Christmas, a lot of people take out credit cards or loans. Whilst these can be helpful during costly times, they can be dangerous if not managed carefully. So if you’ve taken out a credit card or loan, it’s important to get on top of your debts as quickly as you can. In January, work out how much debt you’re in, who you owe money to and when you have to pay it off. Take a look at how much you’ll be making in debt repayments each month and take into account the interest you pay on each loan, as this will add to your debt.
2. Draw up a budget to help you manage repayments
Once you understand your repayments, it’s best to create a weekly budget that takes into account all of your living expenses (like food, mortgage and rent payments, bills, etc) and includes your Christmas debts. This will help you to prioritise your outgoings and see where you need to cut back, if you are struggling. Try to pay off debts as quickly as possible, so that you don’t continue to accrue interest and further debt. If you’ve borrowed money from a few providers, pay off the ones with the highest interest first to manage your debt.
3. Don’t be afraid to ask for help
If you are feeling overwhelmed, uncertain or just have a question about your debts after Christmas, there are lots of people who can help. Citizen’s Advice Bureau offer guidance on financial problems and are trained to help after Christmas. You can contact them or view their helpful advice online. If you’re having trouble paying your credit card or pay-day loan, talk to your specific provider as soon as possible. Getting in touch sooner means that they can do more to help.
Manage your energy bills
1. Get in touch with us
At E.ON, we believe that no one should be left to struggle at Christmas. If you think you might have problems paying your energy bills, call us as soon as possible. We can offer you advice and even help you manage your payments. The quicker you get in touch, the more we can do to help. Call us on 0345 301 5882 and choose option one. We're open 8am to 8pm Monday to Friday, and 8am to 4pm on Saturdays.
2. See what we can do to help
There are lots of other ways we can help in the long term. At E.ON, we can offer customers a bit of extra help with our Energy Fund. The Energy Fund can help you pay old energy bills and even buy new appliances if you’re struggling to afford them yourself. Plus, the government’s Winter Fuel Payments can give eligible people between £100 and £300 towards their winter heating bill.
3. See if you can get a smart meter
Smart meters are clever things. They let you easily monitor and control your energy usage, which can be a big help during chilly winter months. By submitting your smart meter reading to us, you guarantee that your bill reflects the energy you’ve actually used. This means you can avoid any billing surprises in the New Year and can help you keep an eye on costs. You can register your interest in smart meters with us now.
Plan ahead for next Christmas
1. Spread the cost
Start saving throughout the year and spread the cost of Christmas. If you went over your Christmas budget by £600 in 2015, put £50 away each month leading up to the festive season in 2016 to keep on top of your finances.
Buying wrapping paper, Christmas cards and other seasonal items in the January sales is a clever way to get ahead on your Christmas shopping – and to save some money too! As it gets nearer to Christmas, consider buying some presents early, so that December costs are more manageable. And, if you notice that your energy bill gets bigger in the winter, put money aside throughout the year so that some of the cost is already dealt with.
Budgeting your expenses is an easy way to keep on top of how much you plan to spend. By working out the amount of money you have and the costs you anticipate, you can work out how to manage your money and if and where you need to save or cut back. It’s also easier than you think. There are lots of clever budgeting tools out there, including this one from the Money Advice Service. These calculators help you plan out how much you’re likely to spend, so that you can work out what you can afford.
3. Make sure you understand your loan
Borrowing money can be really helpful during Christmas, when you might need more money than usual. The two most common ways of borrowing money are credit cards and pay-day loans. Credit cards can be opened with your bank and often have an interest-free period, meaning you can easily spread the cost of Christmas over a few months. Pay-day loans are trickier and should only be used as a last resort – they tend to have very high interest rates and are best avoided as a result. If you do need a pay-day loan, check your interest rate and repayment period carefully.
Interest rates can often be difficult to understand. If you do need to borrow money, ask your bank or loan provider to explain the interest rate with an example. If you borrow £100, what will the weekly, monthly or yearly interest be on that amount? Alternatively, you can work out the rate using a tool like an interest calculator. Whichever route you choose, make sure you understand the terms of borrowing so that you can manage your repayment.
If you’re having problems paying your bills after Christmas, don’t suffer in silence. There are lots of solutions out there to ensure that you can focus on all the good things that the festive period has to offer.