How to avoid a debt hangover as Aussies spend $23 billion
Boxing Day sales are upon us, but Aussies are being warned not to spend more than they can afford.
Aussies set to spend up big in the post-Christmas sales should create a budget and keep track of their spending if they want to avoid a debt hangover in the New Year, RateCity warned.
According to the Australian Retailers Association, Australians are estimated to spend $23.5 billion in the post-Christmas sales from Boxing Day through to January 15.
While credit card debt has largely fallen throughout the year, summer is traditionally a time when people rack up debts they can’t afford to repay.
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RateCity.com.au analysis of the RBA credit card statistics for personal cards found Australians paid $486 million in credit card interest across January and February of this year, with credit card debt accruing interest reaching over $17.44 billion in the month of February.
Since then, Australia’s credit card debt has fallen by $558 million, with the latest credit card bill clocking in at $16.89 billion in October. However that is likely to rise after the silly season.
That said, it’s not just credit cards stinging shoppers. A 2022 RateCity survey found 41 per cent of buy now, pay later (BNPL) users found themselves in some level of financial trouble using these services.
RateCity research director, Sally Tindall warned consumers not to “blow a hole” in their budgets in the Boxing Day sales.
“Nabbing a bargain might be fun, but the debt hangover it can cause can have serious repercussions,” Tindall said.
“The Boxing Day sales can be a good opportunity to stock up on things you need at discounted prices, but they also have the capacity to leave your budget in tatters if you’re not careful.
“If you are planning to hit the shops, write out a list of things you need, set yourself an iron-clad budget and keep a running tally of how much you have spent.”
Tindall said there was no point in buying yourself a brand-new sofa if you don’t have money at the end of January to pay the rent or your mortgage.
“If you’re putting your purchases on a credit card, make sure you can pay the total, in full, when your next bill comes in,” she said.
“Buy now, pay later platforms might be interest-free but they can still cause chaos on your budget if you don’t have the funds to pay the money back.”
Tips before heading into the Boxing Day sales
Plan ahead: Write out a list of things you need and set yourself a budget.
Do a price check: Just because something is listed as ‘on sale’, doesn’t automatically make it a bargain. Do a quick price comparison before you buy to see if it’s cheaper elsewhere.
Don’t impulse buy: Before you hit ‘purchase now’, stop and ask yourself two questions – do I need this? Can I afford this?
Tally it up: Keep a running tally of what you have spent and make sure this figure stays within budget.
If you make a mistake, send it back: You’re better off having money at the end of the month to pay the bills rather than the latest pair of Vans.
Stay safe online: Only shop at trusted sites and use a secure standard form of payment
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