Its Simple: No Cash, No Sale

The Telegraph
The culprit that lurks in most Christmases is consumer debt. We follow the advertising and the marketed expectations and we spend more than we should, with money borrowed from Visa and MasterCard.

And when the Christmas spending is over, we're left with a debt hangover that comes on top of existing high household indebtedness.

Unlike a home loan, for which interest rates are slightly higher than the official cash rate set by the Reserve, consumer credit can be very expensive and it compounds against the borrower.

Store cards and store-based personal finance are even more costly: if you buy a plasma-screen television at a big department store, using its store finance, you could be paying more than 20 per cent above the official cash rate.

Let's say you buy the plasma on a finance deal with an effective cost of 28 per cent. This is an extremely high rate to pay, especially if you are using it to buy Christmas presents.

My advice to people this Christmas is to make an early New Year's promise -- that Christmas will not send you broke.

The best scenario is that you do your shopping with cash.

Make a budget, write a list and be disciplined about it. If you can't do it within your budget, don't do it.

Find another present.

If you can be organised and begin your shopping three weeks earlier than normal, you get the best selection and some good bargains. You also avoid the panicked last-minute shopping when you have to buy whatever is on the shelves.

Beginning early also spreads your cash flow, as you can buy over several trips and you are not forcing yourself to use credit cards to pay for your shopping. You fund it out of cash flow.
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