The Christmas and New Year holidays all of a sudden seem a long time ago, credit card statements crammed full of Christmas spending commitments have landed on the doormat and it is still over a week until the first pay day of the New Year.
Research shows that the combination of spending too much during the holiday season, failed New Year resolutions, the cold weather and the budgeting marathon that defines January for many people makes the third Monday of January the most depressing financial day of the year.
However, there are ways to combat this, take control of your finances and ensure you pay off your debts as soon as possible.
Dr Cliff Arnall, a Cardiff University psychologist, who put together a formula to define 'Blue Monday', said the day can be used as a launch pad for improvement.
He said: “Use the day as a springboard for a higher quality life. For example keeping Christmas spending to a strict budget next year will make you less depressed in the last week of January.”
The best way to pay for Christmas is by budgeting throughout the year to save a regular amount to put aside and use to pay for Christmas presents, food, drink, decorations and social events.
There are a number of different ways of doing this such as saving into a Christmas Club, putting aside a regular amount into a savings account or buying presents throughout the year that are all worth considering for next Christmas.
However, even with the best intentions, it is not always possible to save the money or to avoid spending money you don’t have in order to give your family a great Christmas.
Recent research from Vouchercodes.co.uk found that 41 per cent of UK adults use credit cards, overdrafts and loans to pay for Christmas and 17 per cent are still paying off the cost of Christmas from last year.
This can be an expensive way to pay for the costs of Christmas because you will be likely to pay interest or bank charges on the debt.
However, there are a range of options to ensure you pay back the debt as soon as possible whilst paying the lowest amount of interest.
There are two good credit card options for paying the least amount in interest charges on your Christmas expenditure.
Taking out a credit card that gives an interest-free period on purchases is one good option. Although this is too late for Christmas 2013, you could consider it for next year.
There are a number of deals on the market that give up to 16 months without charging interest on new purchases. This means if you have a budget of say £600, you can spend that and then pay it back at £50 a month over the next 12 months to pay for your Christmas with no interest charges.
If it is too late for that consider applying for a balance transfer credit card.
You will pay a fee of between two and three per cent of the total amount of the balance you are transferring to your new credit card, but then you have up to 30 months for the longest deal in which to repay the debt without incurring any further interest.
If you are unable to pay off the whole amount before the end of the interest-free period, you could switch to another interest-free balance transfer credit card.
Never pay the minimum amount on a credit card debt as it could be many years before you have the debt cleared. If you have more than one debt, prioritise your repayment schedule by paying off the one that attracts the highest rate of interest first.
Another option of managing your Christmas spend in the most financially savvy way is to apply for a bank overdraft.
There are a number of current accounts that offer an interest-free overdraft for a limited period and this can give you the time to repay the amount you owe before interest starts to be charged.
Some other current accounts provide a free buffer zone so you can go overdrawn by a little for a limited time without incurring charges. Otherwise, consider switching to a current account with a low interest rate on overdrafts.
If you have a number of debts and are paying interest on all of them it could be worth consolidating them all into one personal loan.
If the combined debts on your credit card, overdraft and store cards exceed £7,500, then you may be able to apply for a personal loan between £7,500 and £15,000.
The rates on loans of this amount are currently the lowest they have been for over a decade on the best deals with rates as low as 5.0 per cent.
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