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If you are caught in the cycle of borrowing money to pay for Christmas each year then now may be the time you say “enough is enough” and banish the ghosts of Christmas past.

If you’re still paying for Christmas 2013 then you’re not alone. A third of respondents to a recent survey* carried out for us admitted that they borrowed money to cover some of the cost of Christmas. One in 10 of those surveyed are still paying off that debt now – with just a few weeks left before Christmas 2014. And 13% of those surveyed said they will need to borrow money to pay for Christmas this year.

Check our top tips to getting out of the cycle of Christmas debt…

1. Learn from the past

It could be a good idea to think about what you spent last year, what you bought and what you have to show for it today. If you bought someone an expensive jacket but only got a cheap toiletries gift set in return then make a note – maybe you could aim to get them something a lot cheaper or have a quiet word and suggest that you veto gifts to one another this year.

Another way to possibly cut costs this Christmas would be to slim down your list of who you buy presents for. All too often we feel obliged to get presents for people who we don’t really need to. For example, you might give your neighbour’s children selection boxes every year but if they are now teenagers then it could be time to stop. You could suggest to friends that you don’t buy presents for each other or you could have a go at making some handmade gifts, which may be a lot cheaper than buying something.

Rather than thinking about how much you WANT to spend this year, think about how much you can AFFORD to spend. You need to prioritise paying your bills and reducing your debt rather than adding to it.

2. Clever gifting

Sometimes we make buying Christmas gifts for children harder than it needs to be. If you feel like you have to compete with others when it comes to how much you spend on your children then try to change your outlook. Young children especially have no concept of money and usually have no idea if you have spent £30 or £100. You can often pick up gifts second-hand at a fraction of the cost of buying them new.

Babies and toddlers usually enjoy unwrapping presents more than the actual presents themselves so don’t be fooled into buying an expensive toy that will only get their attention for a few months. If your children usually write a list to Santa, don’t feel under pressure to buy everything on that list; just explain that Santa won’t get them everything and they might get Christmas money they can save towards it, or they might get it for their birthday.

If they want the latest games console but you can’t afford it, it is far better to say no or think of another solution rather than having to borrow money. You could always ask members of your extended family to chip in.

It is usually best to be honest with older children and teenagers and tell them that money is tight. Maybe tell them you have a budget of X amount and then either give them the cash or get them to tell you what they want.

IOU presents can help because you don’t have to pay for them straight away but you’ll have to remember that you’ll need to pay at some point. You could give someone a photo frame with a message inside saying that the frame is for a photo you will take when they go for a special lunch/day out on you. If you have friends who have children you could volunteer to be their babysitter one night by giving them a homemade babysitting gift voucher.

It could really help your finances in the New Year if you manage to cut back your spending for this Christmas.

3. Smart cooking

If you normally cook Christmas dinner for a large group this can be a real drain on your finances so you could suggest cooking for just your immediate family this year and meeting up with everyone else after the food. Ultimately you could try and cut some corners by switching the turkey for chicken and trying to think of the meal itself as a standard Sunday dinner. You don’t need to spend a fortune on all the extras – and switching to a discount supermarket might help you cut your food bills further.

If you hate cooking the Christmas dinner and your family aren’t too fussed either you could always decide to be radical and cook your family’s favourite meal instead. Pizza and chips anyone?

4. Plan ahead

Why not start saving for Christmas 2015 from January so that by this time next year you could be in a much better financial situation? Just saving a little each month for Christmas could really help.

*OnePoll questioned a nationally representative sample of 2,000 adults aged 18 and over between 24th September and 3rd October 2014.

By Sarah Symons

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