Avoid overspending at Christmas

Each January the Isle of Man Office of Fair Trading sees an increase in the number of people approaching them for debt counselling help. Many have become carried away at Christmas and spent too much. With a little forward planning Christmas need not lead to distress in January.

To help people manage their Christmas spending better the OFT has produced a list of six Top Tips. In addition the Office has a series of interactive money management tools on its website to help consumers.

The Top Tips and Money Management Tools including an interactive budget sheet to help them draw up and keep an eye on their budget this Christmas, can be accessed on the OFT’s website www.gov.im/oft. Copies of the Top Tips can be obtained from the OFT at its office in Lord Street Douglas, telephone 686500. Consumers can also obtain copies of budget sheets from the OFT.

Chairman of the OFT Bill Henderson MHK said “There are all sorts of financial and particularly social pressures on people at Christmas. These include peer pressure, embarrassment of not being able to buy as much as others and succumbing to personal pressure to throw caution to the wind.”

Mr Henderson continued ”Speak to family and friends and see if you can agree a limit on what you will spend on each other – they may be worried about overspending too and may be relieved if you suggest an upper limit. If you are food shopping you may want to start buying long life goods early. There are often reduced price “seasonal” foods in the shops in the run up to Christmas which you can put away. “Own brand” goods are normally cheaper than branded ones and are often of similar quality. Look out for Buy One Get One Free goods – but only buy them if you are sure you need them, you don’t want to end up with goods that lie in the cupboard until they pass their “use by date” and are then thrown out.

It is easy to overspend but by following these Tips and drawing up and sticking to a budget you can prevent a lot of grief for yourself and family come January. Remember this Christmas to Buy Smart.”

Isle of Man Office of Fair Trading’s Top Tips for Christmas Budgeting

Tip one - Plan Christmas

Be realistic and budget accordingly. Work out how much you are going to spend on each person – and stick to it. Manage expectations as to what you or Santa can give and don’t forget the everyday bills. Remember that rent, the mortgage, utility bills, food bills, travel expenses and other existing debts still have to be paid – and the consequences can be severe if they’re not. Even though it’s Christmas, get your priorities right. You can find out more about budgeting and fill in an interactive budget sheet on the OFT’s website www.gov.im/oft.

Tip Two - Keep things simple

If you can afford to pay for your goods outright by cash, cheque, or debit card, don’t be persuaded to take out extended credit agreements unless they really do work out cheaper. Research has shown that we spend a third more if paying by card than when we use cash. Don’t feel under pressure to ‘push the boat out’ to meet other people’s expectations. You may end up in debt. You can find out more about borrowing money in this way on the OFT’s website www.gov.im/oft.

Tip Three - Shop around

Try as many different places as possible to find the best price. Buy what you want and not what other people say you need. Be wary of extended warranties; the cost of a repair could be less than the cost of the warranty and remember you have consumer rights to reject goods that are faulty. If you are going to use a credit card, shop around and compare terms. Some cards charge high interest rates, but provide interest free periods or discounts. Budget for all these costs and put the payment dates in your diary to make sure you pay on time, even if it’s only the minimum, or you will be faced with additional charges. You can find out more about managing your money on the OFT’s website www.gov.im/oft.

Tip Four - Buy safe to be safe

Don’t be tempted to buy from traders you don’t trust and don’t borrow from unauthorised lenders. The initial savings and convenience may prove to be a false economy. Check for hidden extras in any credit agreement. Work out the total amount payable. Ensure that the monthly instalments are within your budget before signing. Interest free credit can seem attractive, but if you don’t pay on time, or miss a payment, you could have to pay a lot more. You can find out more about borrowing money in this way on the OFT’s website www.gov.im/oft. The website also contains advice on avoiding buying counterfeit goods.

Tip Five – Don’t throw away receipts

Save the receipts for goods you have purchased. This will help you in establishing where the goods were bought and the price paid. Many stores have post Christmas sales and without a receipt you could find that you will only be reimbursed the sale price rather than the full price paid before Christmas.

Tip Six – Returning unwanted gifts

Unfortunately you have no contract with the retailer which means that you cannot force them to accept the goods back. However bear in mind that the shop would be under no legal obligation to receive the goods back unless they had made this a term of the contract at sale. Some retailers will offer credit notes or an exchange if the goods are rejected in perfect condition and if proof of purchase can be provided. The law would not require them to do so unless they had made this specification at the time of sale, or their stated shop policy offers such extended provisions. You can find out more about your shopping rights on the OFT’s website www.gov.im/oft.

And finally ……. Tip Seven - Start planning and saving for next Christmas

Once Christmas is over, it’s a good time to start saving for the next one. Work out how much you have spent and divide it by ten. Start saving this amount in February then you should have enough saved up by November. Open a savings account to help you to keep your savings separate from your regular income giving you less temptation to spend and earning you interest at the same time. You can find out more about planning for Christmas on the OFT’s website www.gov.im/oft.