Sales spending aftershock?

Whether you see it as consumer confidence or reckless overspending, the £2.7billion that flew into the tills on Boxing Day will have meant one thing for certain – the vast majority will have been on credit and much of that will have been simply unaffordable.

Halifax Bank reported on Twitter that on Boxing Day 2,500 people applied for a new overdraft or extended an existing one, and 1,400 applied for a credit card online.  And that’s on top of the average of around £3000 that is owed on the UK’s credit cards.

Debt advice charities are bracing themselves for their busiest time of the year.  Millions of families will be faced with the stark reality of the cost of Christmas when credit card bills hit the doormat in the middle of January.

So we thought it would be helpful to bust some money management myths from the outset, to help point 2014 in the right financial direction.

It’s not that hard to keep the money straight.  Yes it is.  Running a family budget is like running a small business. So give yourself a couple of hours, sit down with a pad or a spreadsheet and list all the bills you have to pay every month to keep the family household going.  Those are the first priorities. Then list HP payments (which are secured against the purchases, such as your car), then the unsecured debts (credit cards and personal loans), then all the rest – paid-for TV services, club memberships, online subscriptions. Now add up your income. And that’s what a budget looks like...

It’s more important to pay credit card and loan debts than the bills.  Wrong! Paying the “bills” is what keeps a roof over your heads, the house warm and food on the table. You should make these payments before anything else.

Online and mobile direct payments are very convenient.Convenient for the seller, not always for you.  Mobile shopping is the fast-growing area of retail.  Do you make your best money decisions sitting on the bus looking at your phone?  Probably not...

Banks are there to help you.No, they are there to make money. To sell you things. To persuade you to buy things.  Just like any other shop. 

Banks and credit card companies are more or less the same.No they’re not. The money in your current account is yours – and you may get interest or cash-back deals. A credit card is always a debt. And if you’re not careful it can be forever, not just for Christmas.

Credit is a service.  No, credit is a product that you pay for, which may be useful or may be a dreadful waste of money.  Think of umbrellas.  They all do the same job but some are much more expensive than others. And in high winds, or when you already have debts, they just make matters much worse...

So the motto for 2014? Take a calm, fresh approach to your money. Take control, and include all the family in your financial planning. And if you’re in serious debt, ask for help before you ask for a loan.