Every summer, I find myself spending way more than I planned, even when I think I've been pretty good about it (though some years are better than others). It's not the big gifts that get me, but all the little extras of the season - the extra coffee catchups, the bottle of wine for the BBQ, the takeaways because I'm too tired to cook, and all the New Year's fun. "Christmas" isn't just one day; it's an epic season that kicks off in December and rolls right through until mid-February, once Waitangi weekend is over and the kids are back at school, and we all breathe a sigh of relief.

So, whether you're a pro at managing money or just trying to get better at it, most of us have gone a bit overboard with our Christmas spending at some point. Kiwis admit to overspending by as much as $1000 during the holidays, often using high-interest debt to cover it. By February, we might be regretting some of those spending decisions, especially when we're still paying off items that are long forgotten or unappreciated by the recipient. Our Christmas spending often turns into a months-long affair as we work to pay off our splurges.

If this sounds a bit like you too, let's take a moment to figure out how we got ourselves into this jam before we dive into what to do about it.

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Common Reasons for Overspending at Christmas

Awareness is the first step! Some of these might sound familiar, and you might not have even realized these are all financial red flags:

• Trying to please everyone and "keeping up with the Joneses."
• Last-minute, unplanned buying sprees.
• Not saving cash in advance for the season (it's not just about Christmas Day!).
• Putting things on credit and having to pay interest.
• Trying to buy for everyone… teachers, coaches, neighbours, you name it.
• Not shopping sales or comparing prices.
• Falling prey to slick sales tactics.
• Trying to make someone "happy" with the best gifts.
• Trying to be the "best" parent by giving your kids things you never had.
• Emotional shopping: spending when you're hungry, angry, lonely, tired, or hormonal.
• Not factoring in all the little convenience things that add up – catch-ups, dinners, coffees, Uber rides, etc.

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I am in debt… What to do now?

First things first, accept that this is the situation you're in. It's okay, we've all been there! Now, let's tackle it step by step:

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Be brave.

You could start by looking at your bank and credit card statements for November, December, and January. Sort all expenses into categories like gifts, travel, meals, and other holiday-related costs. This will help you understand where you may have gone overboard or had unplanned expenses.

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Reflect on why these areas blew out.

Was it unplanned spending, people-pleasing, or last-minute buying? Be honest with yourself so you can avoid the same traps this year.

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Determine what you owe and write it down.

There are several ways to tackle debt, depending on your personality type. You can go for the snowball method (paying off the smallest debt first), the avalanche method (paying off the highest interest debt first), or debt consolidation. Sorted.org has a great explainer on these different approaches.

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Create a budget.

Depending on how you choose to tackle the debt, you'll need a budget. Use a budget tool (like the one on Sorted) to see what you have coming in versus what’s going out. My Budget Pal by Booster is a good financial tracking app you can use to keep track of your expenses, and it's something we recommend to clients.

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Avoid getting into further debt.

Consider making the minimum repayments on your debt while you start saving for an emergency fund on the side. If you can save $1000 in a cash emergency fund, you're off to a good start for unexpected vet, dentist, or mechanic bills. (Remember, not all car, medical, or vet bills are emergencies! Some are routine, so make sure you have a fund aside for these as you go forward.)

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Unfollow and Unsubscribe

If you have emails and notifications on sales popping up from your favourite brands every day, this could be tempting. Unfollow the socials, uninstall the app, unsubscribe from the newsletter, block the notifications if you have to. Find positive financial influencers to follow instead.

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If you need extra cash, cut back on non-essentials (we're all guilty of these!), return any gifts you bought for yourself, sell or regift any unwanted gifts or gift cards, and look for ways to earn extra income. MoneyHub has a good guide on NZ Side Hustles.

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Put your credit cards away.

Store them in a safe place (some people even freeze them!), remove them from your digital wallet, and STOP SHOPPING! Use cash where you can.

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Communicate with your family about your financial goals.

‍ It's really hard to commit to new habits without support.

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If you're in deep, seek professional financial advice.

Talk to your Velocity adviser or call the NZ free helpline Money Talks.

How to Avoid Debt in Future

Once you’ve got the current debt in hand, it is time to strategically avoid the same debt trap next silly season. We suggest these tips:

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Look Back at Your Spending

Decide if you want to repeat your spending or make some tweaks next time. Check out our blog for alternative Christmas giving ideas.

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Create a Gift List

List the people or charities you want to gift to, including a rough idea of what you'll gift and the cost. Set expectations early with family and friends!

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Set Up a “Bucket”

Create a separate online bank account and direct debit an amount every payday. For example, if you spent $1000 on presents, $500 on food, and $500 on convenience costs, set aside the weekly amount you need to cover that. Do not touch this bucket!

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Add a Cash Buffer

If your budget is $2000, add a small buffer to avoid using credit for extra expenses (there always are some, right?).

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Create a Christmas Account

Set up a Christmas account at the supermarket, like Pak n Save’s Christmas Club.

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Plan the Best Time to Buy

Think about the best time to buy items during the year. For example, electronics might be best bought during Black Friday sales, and a new tramping pack during Winter sales.

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Shop Early

Take advantage of pre-Christmas sales but keep a list of what you’ve already bought to avoid overspending. Avoid shopping around Christmas time itself, as the pressure to overspend can derail good decision-making!

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Don’t Forget Where You Stash the Pressies

Store them in a safe place and remember where you put them, so that you don’t end up buying double.

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Don’t Let the Kids Guilt You!

Don’t let the kids guilt you into buying the latest, greatest. You’re not a failed parent if you don’t buy them the best of the best.

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Consider Your Gift Recipient’s “Love Language”

If they value your time and conversation more than fancy gifts, forget the fancy new watch and go on a surprise picnic instead.

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Reuse Your Christmas Decorations

Reuse your Christmas decorations or try making some. See our natural Christmas tree here.

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Worried About Overspending?

Ditch the after-pay account and reduce your credit card limit. A smaller limit with less funds to use will change how you spend.

Conclusion

Like all hangovers, they may be painful but thankfully, usually temporary. The important thing is the lesson we learn, and the decisions we make about how we want to act going forward. If you need help with managing your debt, do reach out. More Kiwis have debt than not, and a bit of support and education can make all the difference.

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This article was written by Shona and peer reviewed by the Velocity Advisory Team.

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About Shona: Hi, I’m Shona, the communications and marketing support person for Velocity Financial. Designing effective communications in a complex industry such as Finance is a worthy challenge. Finding ways to bridge gaps between complex financial information, and the everyday needs of people trying to navigate that world through informed choices, is something that I relish. I love deciphering and disseminating the expert knowledge and ideas of our clever team, into simple messages that speak directly to our clients, who are hungry for more knowledge and better understanding (like me!). In my outside life, I am a keen photographer and, like others in the team, I have a passion for the outdoors, hiking and mountain biking. I also train in martial arts and have been known to wield a sword on occasion.

Disclaimer: I am not a financial adviser and what I have shared is general advice that has been peer-reviewed by my team. As always, make a time with our financial advisers for expert advice about your own situation.

Always get professional advice

The information shared in this post is meant to be general guide to support you on your journey. When making important decisions about your finances, we encourage you to seek independent financial advice first, tailored to your unique situation.  As well as talking with a financial adviser, make sure you talk to your lawyer and accountant too – together they'll help you find the best solution for your specific situation. Our knowledgeable financial advisers are here to help. Check out our website for the details about our financial advisory services in our disclosures  https://www.velocityfinancial.co.nz/disclosure-statement.

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