Prepare early to avoid Christmas debt
It's barely October, and already the Christmas sales have started. The chocolate reindeer, have appeared in Sainsbury's, the cards are already in Tesco.
In the coming weeks we can expect to be bombarded with images of wide-eyed children, stunning snowfalls and clinking champagne glasses as families as the advertising industry sells us the image of the perfect family Christmas.
If only it were that simple. Jane Preston, who runs the Christians Against Poverty debt centre in Telford, is only too aware of how the pursuit of the perfect Christmas can turn into a nightmare of debt once the tinsel has been taken down and the fairy lights packed in the box for another year.
“Every year we see a flood of people coming to us in January who have spent more than they can afford at Christmas," she says.
Mrs Preston is urging people to start planning for Christmas now to avoid getting into trouble once the festivities have finished.
"It doesn’t have to be that way, it can be different if you start today,” she says.
The Telford centre, a partnership of Anglican churches in the town, has helped more than 70 families deal with their debt problems since it was set up just two years ago.
Mrs Preston says the important thing is for families to start thinking about what they plan to spend now, and looking at how they are going to pay for it.
And she is urging people who fear they will get in trouble to contact her as soon as they realise there may be a problem.
“If you know that before Christmas comes your finances are not in good shape and you struggling to pay the bills, don’t struggle on, please let us help you," she says. "One phone call could be the difference between a merry Christmas or a miserable Christmas."
The warning comes after two influential parliamentary committees urged the Government to set up an independent public inquiry into the £200 billion of debt amassed by households. The level of personal debt in the UK is now at the level it was just before the 2008 financial crash, and there are fears that a rise in interest rates could add to the pressure.
According to the Money Advice Service, there are now 8.3 million people in the UK with problem debts, while the Office for budget Responsibility has predicted that unsecured consumer debt – including credit cards, personal loans and car finance, is set to soar over the next four years, above its 2007 peak.
The Parliamentary work and pensions select committee, as well as the business select committee, have called for an inquiry to see how the Britain's debt problem can be tackled.
Frank Field, chairman of the work and pensions committee, says: "We need a commission to assess the current situation.
"There are so many moving parts that a proper investigation goes beyond the remit of any single committee."
The Treasury select committee, led by former cabinet minister Nicky Morgan, now plans to hold a series of meetings around the country to examine the impact of debt on individuals and households.
Mrs Preston the important thing is to resist the temptation to borrow money to pay for Christmas, and says it is possible to have a good time without spending money.
"The most important thing is not to take out any loans to pay for something they can't afford," she says.
"It is no fun if you find yourself in trouble in January, and you won't enjoy Christmas if you spend it worrying about how you are going to pay for it.
"People should look around for bargains, and there are a lot of things going on around the town where they can enjoy themselves without spending a lot. Our community centres are putting on events all the time.
“With personal borrowing on the rise we are warning people to plan what they are going to spend this Christmas and save as much as they can. This way with less than a hundred days to go they can enjoy a Christmas without the worry of credit."
The charity helps people in the Telford area regardless of faith, and visits every client in their own home to ensure their privacy. Specialist teams at head office negotiate with creditors and create a workable budget enabling each individual to go debt free.
Mrs Preston says that demand has been so high since the Telford branch opened, it is now looking into the possibility of taking on a second case worker to cope with demand.
Her experience is reflected by that of other organisations which work with debt in the county.
Citizens Advice in Shropshire – which does not cover Telford & Wrekin – helped 1,362 clients with 6,413 debt related problems during the 2016/7 financial year.
Of those, the organisation helped 52 of them re-schedule £383,628 worth of credit card debt – an average of £7,377 per individual.
During the first six months of this year, the StepChange charity helped more than 652 people across the Shropshire and Telford & Wrekin deal with debts totalling nearly £7.2 million. The figure is actually a significant improvement compared to the corresponding period the previous year, when more than 700 people owed a combined total of £11.4 million, but it is still a significant number of people struggling with finances.
In August, Citizens Advice accused credit card companies of fuelling debt by automatically increasing borrowing limits for people already struggling with debt. It found that nearly one in five people battling to pay their existing debts had seen their credit card limit increased – higher than for cardholders in general.
Need help with debt?
*Christians Against Poverty Telford debt centre, for people living Telford, can be contacted on 0800 328 0006.
*StepChange debt charity is open to people from all areas. Its helpline on 0800 138 1111 is open Monday to Friday from 8am to 8pm, and Saturday from 8am to 4pm.