Chris McCormack/cm160019

Back on track: Recovering from the Christmas splurge

WITH the nation's credit card debt predicted to top $51 billion after the Christmas holiday splurge, households are scrambling to get back on their feet.

It is no wonder - a recent Fair Go Finance survey revealed one in five Australians planned to borrow money to pay for Christmas, and a third intended to use a credit card.

Fox Symes and Associates director Deborah Southon says financial planners are preparing for the busiest time of their year as the credit hangover sets in.

"In our 15 years of operating, we have always experienced a surge of calls in January from people seeking help with their debt," she said.

"Many people are optimistic at the beginning of the new year and see it as a perfect time to get their financial situation in order.

"It may even be a new year resolution. Others quickly realise that the Christmas period has compounded their existing debt problems."

Ms Southon's first piece of advice for getting back on track: cut up your credit cards.

"Credit cards encourage people to spend money they don't have," she said.

"Cutting up your credit cards is the best way to avoid the temptation of overspending."

Tips for getting your finances back on track after the Christmas splurge. Photo Centro Art
Tips for getting your finances back on track after the Christmas splurge. Photo Centro Art Centro Art

Moving your debt to lower interest rate cards was Ms Southon's second tip, with interest rates varying anywhere from 10-30% a year.

"If you have several cards at a higher interest rate it is advisable to move as much of that debt as possible to a lower interest card if you can," she said.

"Or pay them off first. You can save hundreds of dollars a year by doing this and also pay off your debt more quickly.

"This will only be effective if you cancel the higher interest rate cards as soon as possible."

Ms Southon said one popular solution was to consolidate debts into a personal loan, generally offering a better interest rate than credit cards and allowing all debt to be combined into a single, more easily manageable loan.

"Unfortunately many people only address their debt problems when it is too late and may find that their impaired credit report makes them unable to be approved for debt consolidation," she said.

Another important technique is to pay credit card debt in order of priority, Ms Southon said.

"If you have several cards subject to different interest rates and you cannot consolidate the cards into one debt, it makes sense to pay off the cards with the higher interest rates quicker," she said. "For example if you have two credit cards with the same balance but with differing interest rates of 10% and 25%, then you should pay more toward the higher interest card."

"Once the higher rate card is paid out you will find your smaller debts are easier to manage."

Getting back on track is all well and good unless you fall into the same pitfalls next time the Christmas urge to splurge comes around.

"You can pay your debts off in the short term but without discipline and better financial habits you will quickly find yourself back in debt trouble," Ms Southon said.

"Budgeting and purchasing things only with cash will ensure that you spend only what you can afford and will go a long way to guaranteeing you and your family a debt-free future," Ms Southon said. 

Visit the Fox Symes website here.


  • Australian households are the most indebted in the world, according to finance firm Barclays
  • We have three times more debt on average than we did 25 years ago
  • In 1990, average household debt was equivalent to less than six months income
  • Last year it had tripled to 18 months income
  • The top fifth of savers only have four times the income of those who save least, according to a Bankwest Curtin Economics Centre study. However, they had 200 times more savings
  • Our government debt sits at about $400 billion
  • Our household debt has reached more than $1.6 trillion

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