Avoiding the Debt Hangover: How to Plan Your Finances for the New Year

The Christmas and holiday period is the perfect time to relax and unwind, spend quality time with friends, family and loved ones, and even travel to exciting destinations.

Although a worthwhile way to simmer down after a busy year, the financial burden of planning and executing your holiday activities – e.g. purchasing Christmas gifts, hosting large gatherings, and ringing in the New Year – can be a heavy toll.

This is especially true in the current financial landscape, where reportedly more than 3 million Australians are resorting to credit cards to pay for everyday expenses such as fuel, groceries, and utilities. In this blog post we uncover ways you can plan ahead, budget and reduce financial stress over the holiday period, in addition to ways you can start getting on top of debts for 2024.

Key takeaways


  • The Christmas and holiday period is an expensive and stressful time for many Australians
  • Setting a clear budget and spending limit on certain items (e.g. gifts, groceries, decorations) can go a long way to keeping you in the green after the new year.
  • For those already managing debt, exploring debt relief options may help ease financial burden.


Debt hangover avoidance tips

To help keep your finances afloat both during and after the silly season, try out these five useful money-saving tips.


1.Take stock of your holiday spending

Now is the time to set a budget for the various holiday expenses you can expect to incur over the next month. These include money spent on Christmas gifts, groceries, household utility bills, travel, and other associated costs like Christmas decorations and subscription services. Take the time to itemise these expenses, and then set a budget for each item, like so:

Christmas gifts
Try to set a firm-but-fair spending limit on Christmas gifts this year. Maybe set a separate budget for individual family and friend groups, from partners and children to extended family. Talk to your partner about minimising gift spending on each other, focusing on affordable but thoughtful gifts instead of expensive generic gifts. Try to set realistic expectations for your children as well – avoid promising gifts that may be out of reach.

If you’re hosting Christmas lunch and/or dinner (or taking food elsewhere), purchase your meal ingredients in advance – ideally when the items you need are on special. Check the discount section of your fresh produce and dairy aisles, as certain reduced goods could stay fresh until Christmas. Do not be afraid to settle for home brand (general label) items, either. The savings will outweigh the unnoticeable difference in quality.

Travel expenses
Search on Facebook marketplace or elsewhere for second-hand luggage items, such as backpacks, suitcases, and travel bags. Stock up on fuel when the price is low. This may vary from week to week, so consider downloading a fuel price app to keep you aware. If you’re flying, weigh up the cost of using a ride share (or taxi) to get to the airport compared to driving there yourself and parking onsite.


2. Be careful of Buy Now, Pay Later apps

Buy Now, Pay Later (BNPL) apps make it easy to make instant purchases and gradually pay them off in bite-sized instalments. All you have to do is download the app, share some basic details to sign up, and request the loan size. You then pay back what you owe on a fortnightly basis, until your debt is clear. Plus, you only pay extra if you miss a payment.

Despite the ease and efficiency of BNPL apps, they can lull you into a false sense of security. They may convince you that you can afford to pay for something, when in actual fact you may struggle to repay the debt. What if your circumstances change? Losing a job, being demoted, or going through an unexpected medical emergency can really set you back.

Therefore, make sure you can easily repay what you owe during the debt repayment period, even if life throws you a curveball. Use our official budget calculator, which lets you put in your income and expenses and see what you can afford in weekly, fortnightly, and monthly repayments.

Learn more: The Pros and Cons of Afterpay Plus


3. Take advantage of debt consolidation

Are you already struggling to pay off several existing debts at once? If so, then staying on top of your debt repayments – while balancing the expenses of the holiday season – into the new year can be tough.

For this reason, get started by talking to a debt relief consultant for free advice and some peace of mind. During your 100% confidential session, they will assess your financial situation, help you explore different debt relief options, and set you up on a plan that works for you.

One debt relief option they may recommend is debt consolidation. This is where you combine all your existing debts into one weekly, fortnightly, or monthly instalment plan. Instead of having to remember different payment dates for different creditors, now, you only have to remember one. And you can even automate the repayment process through direct debt – just make sure there is enough in your account each debt repayment day.

A debt relief consultant may also be able to lower (or even eliminate) the amount of interest and fees you owe.


4. Consider a balance transfer

Using a credit card is an easy and efficient way to pay for the things that you cannot afford upfront right now. Unfortunately, this spending habit can increase the amount of interest you pay on each purchase. It starts small, but gradually racks up the more you use your credit card.

One way to escape credit card debt is to do a balance transfer. Here, you transfer the balance of your existing credit card to a new card, one with a low- or zero-interest introductory period. During the introductory period, you continue to pay off your credit card debt, minus the extra fees and interest you may have owed before.

The drawback? If you don’t pay off your credit card debt before the introductory period is over, then the interest may be higher than your old card. Therefore, if you pursue this option, only do so if you are 100 percent confident in your ability to pay it off – before the introductory period ends.


5.Cut back on spending in every way possible

The holiday season is rife with sudden, unexpected purchases. Cutting back on spending in any way is imperative to meeting your financial goals. Here are a few other smaller ways to cut back on spending this year, and then stay in the green heading into the new year and beyond.

Cash in loyalty points
If you have accrued loyalty points with certain retailers, now might be the time to cash them in. Even saving just $30 to $50 off on a single grocery trip can make a difference. Also, ensure you swipe your loyalty card each time you shop at the appropriate retailer; each swipe will slowly, but surely, help you rack up more loyalty points.

Shop around for the best deals
When shopping for Christmas gifts, don’t just settle for the first retailer you walk into. Shop around and research multiple retailers – both physical and online – before you decide. You may even be able to price match with a preferred retailer!

Bulk up for online purchases to save on delivery costs
Online shopping is a quick and easy way to receive the gifts you need without leaving the house. However, the cost of delivery can quickly rack up, especially if you make separate purchases from several online retailers. Try to minimise the number of online purchases you make. Buy in bulk from a select few retailers, not spread out your purchases to several retailers. Doing so could save you a fortune on delivery costs.


Be smart with your money this holiday season

While the holiday season is an exciting time for many, it can also be full of stress and uncertainty for others. Setting firm yet fair spending limits on different expenses, such as Christmas gifts and groceries, can help ease the burden.

There are also many debt relief options at your disposal, that is if you wish to explore that path. Also, speaking to a debt relief consultant is 100 percent confidential, free, and it will not affect your crediting rating.

Either way, making smart financial decisions will help put you in a better position next year, ensuring you avoid the dreaded debt hangover come January.