While it is easy to blame consumer holidays’ such as Christmas for the accumulation of personal debt, it is our general attitude to spending and managing finances that is mostly at fault. The sheer expense of the festive period does highlight personal debt issues and places them into genuine context, especially in developed economies such as the UK and the U.S.
These two nations just so happen to spend the most at Christmas, with America and the UK recording consumption growth of 2.9% and 2.2% respectively during the festive period in 2014.
How to manage short-term cash flow issues
The advent of Christmas also triggers short-term cash flow issues among consumers, which must be managed and negated prior to the cultivation of a sustainable and frugal plan of action. Consider the following three steps towards achieving this: –
Reduce spending and create a new Budget for a fixed period of time
While you may already operate according to a loose budget, it is fair to say that Christmas is often the destroyer of well-laid fiscal plans. Rather than attempting to resume your previous spending habits, however, you may be better served by creating a short-term budgetary solution that can be sustained over a two or three month period.
Focus on reducing the cost of weekly expenses such as food, drink and utilities, while making a commitment to split this additional disposable income between bills and savings.
Consider Boosting your Income to help increase cash flow
If you owned a business that was struggling with cash flow, one of your first ideas would be to boost, diversify or add new revenue streams. The same principle can be applied to personal finances too, with different options available depending on the education and experience. While you could look to take on a temporary, part-time job to secure an additional wage, those with a marketable skill may also be able to sell their services as a freelancer in-between their standard working hours.
Just make sure that you are not in violation of any existing employment contract before committing to additional work, and attempt to create a schedule that boosts income without compromising your work-life balance too heavily.
Consider short-term Loan Options
While it is easy to vilify short-term lenders and their services, the fact remains that they remain viable financial solutions when they are used responsibility and from a position of knowledge and understanding. A short-term loan should therefore be considered by anyone with an appreciation of this market and its mechanics, so long as they have a regular source of income and create a detailed plan for repayment.
You should start by comparing the interest rates associated with specific short-term loan, as you calculate the full amount to be repaid within the agreed time frame. Additionally, consider partnering with service providers that publish insightful content through their blog and aim to add value to their customers. The Smart Pig website offers an example of this, while it is indicative of a service provider that aims to guide and educate its consumers.