‘You’d be amazed’ Simple tips to combat ‘financial burdens’ at Christmas
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Express.co.uk spoke exclusively with Jonathan Corneron, the Ilumoni co-founder, about how to manage debt around the Christmas time and beyond. Britons should understand the importance of setting a budget around Christmas as it is a good way to avoid overspending.
Ilumoni found that one in three of their borrowers regularly lose sleep over their borrowing so it’s crucial for people to decide what they can afford and stick to it.
Jonathan said: “Agreeing to a budget limit with family and friends is a great way to manage how much you spend because those little stocking fillers can really add up!
“You could even play Secret Santa instead, so you don’t need to buy for everyone separately.
“If you’re already stressed or anxious about your debt it’s really not worth it to overspend. You don’t want to find yourself in the same position come New Year.”
Jonathan continued: “83 percent of UK borrowers think they make good decisions about their borrowing product choices yet over half aren’t happy with how they manage their borrowing.
“Make sure that’s not you by really getting under the skin of your debt – know what you owe, how much you’re repaying and most importantly, how much it’s costing you in interest.”
When in debt, people need to consider all their options. Even with the best intentions, Christmas can still be a “drain on resources and it’s hard not to feel that pressure”.
It’s important for people to know how they borrow, and how they can repay it.
How people borrow could mean switching to cheaper products that they are eligible for.
For example, if someone has multiple credit cards with different interest rates, they might consider consolidating those with a single, low-interest loan.
Jonathan suggested those that decide to do this to “make sure you can afford the repayments and be careful not to rack up debt again elsewhere.”
Alternatively, he suggested that people might be able to balance transfer to a zero percent credit card, or a card with a lower interest rate than what they are currently on.
Secondly, how one repays could mean fixing their repayments at the current figure, rather than only paying minimum.
Jonathan said: “You’d be amazed at the difference this can make. For example, if you had a credit card debt of £4,476 at an APR of 21.9 percent, your next minimum payment would be £119 (assuming the terms are one percent of balance plus interest or £5, whichever is greater).
“If you just keep paying the minimum, even with no further borrowing, it would take 30 years and 10 months to pay off and cost £7,125 in interest alone.
“But, if you fixed your repayments at £119, you’d knock off 25 years and nine months from the total time to repay and save £4,513 in interest (provided you don’t continue to borrow).”
Moreover, debt is not just for Christmas time. More than one in five UK borrowers say they typically buy something on credit and worry about how to pay for it later and over a quarter typically feel guilt or regret when buying using credit.
Jonathan urged Britons to shop around and compare terms if they need to borrow. Some cards can charge high-interest rates, but provide interest free periods or discounts, for example.
He continued: “Budget for all these costs and put the payment dates in your diary.
“Taking control before Christmas doesn’t have to make you a Scrooge and by the time New Year’s resolutions come round, getting on top of debt won’t be one of them.”
Britons can also use apps to help them around this festive period to stick to a budget.
Despite there being no “quick fixes” when it comes to paying off existing debt, by taking the time to understand someone’s spending and borrowing they will be able to make the best decisions for themselves and their circumstances.
Jonathan concluded: “It doesn’t need to be time-consuming or hard to improve your borrowing – apps like Ilumoni can do the hard work for you, by providing personalised, actionable insights.
“So, you can get on with the Christmas preparations and enjoy the festive period.”
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