Author Katrina Shanks, CEO Financial Advice NZ Article originally published in

Christmas debt can be a trap for many people, resulting in the dread of having to pay off their credit card for the next month.

Mix this with the ever-popular buy now, pay later credit form that has taken the world by storm, and many will have a mass of debt after Christmas.

That’s without considering the Boxing Day sales that have become the norm.

Last year, retail spending in December was up 7.5 per cent on the previous year, with higher sales of groceries and liquor (consumables) and long-lasting goods such as furniture, hardware, and appliances (durables).

The spending on durables was up 6.7 per cent on 2019, with the boost in furniture and electrical goods such as cell phones and laptops reflecting spending on Christmas gifts and the Boxing Day sales.

At the risk of being the Grinch of Christmas, putting those purchases on credit and paying off the minimum due can turn into a very expensive way to buy a gift.

For example, if you had $1000 on your credit card and made only the minimum payments of $20 per month, you wouldn’t pay off the debt till about 2027 – and in the meantime you would have incurred a whooping $433 in interest.

And that’s based on a low-interest credit card.

Check out the MoneyHub calculator to work this out for yourself.

Interestingly, a recent Finder New Zealand survey revealed the average New Zealander estimates they will spend $1012 on festive purchases this Christmas, with gifts expected to be the biggest expense at $352.

Of course, the obvious point is if you have budgeted for this and have the funds set aside, that spend is fine because it’s not an expenditure shock for you.

And though that’s the case for many, for others Christmas has again come around too fast and the lessons learnt from the previous year, of needing to budget and prepare, have not been put in place.

So, if you haven’t finished your shopping already, here are some tips to help keep down the cost of your Christmas:

  • Christmas Day can be expensive, especially if you are the host for more than just your immediate family.
  • So why not share the expense of Christmas dinner – get everybody to bring a plate and a drink, or someone brings the salad, someone else brings the potatoes, and so on. Not only does it cut down your costs, but it saves on your preparation time, too.
  • And if someone has a Sodastream or a trendy bubbles water gadget, that can be a fun way of sharing the drinks costs.
  • People tend to overeat at Christmas, so maybe having fewer plates of food on offer would help – maybe have one less choice for dessert or make fudge to go with coffee instead of buying chocolates.
  • If you exchange gifts, look at a secret Santa option with a dollar cap. This can make a significant difference to the amount you spend as well as the expectations we can sometimes feel.
  • Children can judge presents by size, and as a parent you don’t want them to be disappointed, so you buy more than you intend just to make that stash look bigger and more exciting on Christmas Day.
  • Aside from perhaps a main present or two, why not consider additional items they can use during the year that you may have to buy anyway – a new pillow and a nice pillowcase has quite a bit of bulk under the Christmas tree, as does a new towel or even a bucket and spade for those summer days down at the beach.
  • Limit the number of gifts you buy each person.
  • It’s easy to get into the mindset of “it’s nice for someone to open a few presents at Christmas”. This can be a trap because often you buy fillers that aren’t wanted. Buying a present that’s meaningful and well-thought-out is a better use of your money and most probably more appreciated by the recipient.
  • Make a component of the gift.
  • There’s nothing better than receiving home-made rocky road, coconut ice or fudge. Gifted baking is also always well received, never wasted, and is quite often talked about long after the big day.
  • Embrace second-hand, especially if you have great skills in revitalising something aged. You could recover an old lampshade to make it look like a designer lamp, paint old pots and add a new plant, make a herb garden in a big pot, find some old photo frames and repaint them and give some framed photos (great for the grandparents).

The possibilities are endless if you think about it.

Often, though, we forget Christmas doesn’t have to be all about the gifts.

How many of us can remember who gave them what gift last Christmas?

It’s actually about the memories you build.

In our house it was the year the Christmas tree fell over the moment we started to have Christmas dinner and landed in the middle of the table.

Or the tradition we have in our family with lemon cricket (yes, using lemons as the ball) regardless of whether it’s wind, hail or snow.

Every year, I try to be better at making Christmas a time to remember as opposed to a time to spend money.

In the words of my financial adviser, you don’t need to overeat and overspend – you need to enjoy this special time of the year and remember to relax and to take the time to appreciate the important things that surround you. Like family and friends.