The drinks with the co-workers, the lottery tickets, the Christmas Eve dinner, the Christmas dinner, the New Year's Eve celebrations, a trip, the gifts of Kings … Although they had planned to spend 5% less than last year, the Spaniards were preparing to spend 601 euros on average each Christmas, according to a study by consultancy Deloitte. Compared to back to school, which meant an expense of 367 euros per child in September, the January cost is more expensive for many. And, with respect to other years, a survey of the iAhorro bank comparer shows that 79% of Spaniards are convinced that 2019 will be tougher. What should be a user to avoid over-indebtedness at this time of year so complicated for personal finances?
Experts are convinced that the lack of planning is the key to explaining that the January slope can be made even steeper than you would expect. This happens to us when "we do not schedule the expenses of the Christmas dates and we do not save throughout the year to pay them without resorting to extraordinary efforts, or when we exceed a budget that we have prepared and we have to face unforeseen payments in the months later, "says iAhorro's finance expert, Antonio Gallardo.
Do not commit more than 33% of your income
The difficulties that can be experienced when covering expenses in the January cost Sometimes they push for funding. One of the ways to obtain it is to ask for a loan. "The first month of the year we processed 32% more loans per day than the daily average in September 2018," admits the director of loans and cards of the comparator, Eduardo Zafra. Also, the volume of financing has increased by 3% in the first half of January.
"Our indebtedness should never exceed 33% of our monthly income", Underlines the financial advisor Pablo Souto. "In the case of short-term loans, which are always the most expensive, we should not sign what can not be returned in less than three months," he advises. What contrasts with the fact that 26% of those surveyed by the bank comparator distributes these expenses between three or more months.
Book and do not touch 10% of your income
Souto emphasizes that January could be a good time to consider another way of managing personal finances. To avoid falling into an excess of expenses in the future, "we should create a cushion of savings with part of our income," he emphasizes. How? "A good idea is to separate 10% of our monthly income in another account or in a savings account and only touch the money we are saving in case of emergency."
On the other hand, in times of economic crisis, indebtedness continues to be a resource, with this nuance: if in September the objectives of financing are mainly the purchase of a vehicle or holidays, in January the user usually seeks more frequently a solution for general expenses . In addition, always according to data of iAhorro, among the applicants of a loan, in January, those with a monthly income lower than 1,000 euros and those of more than 2,000 euros increase, as well as the profiles without debt or with debts over 40 %.
Beware of the fractionation of debts
In the lengthening of debts far beyond the end of the holidays, the credit card plays a prominent role, in the opinion of Gallardo. "Defer payment is not negative in itself," explains this expert, "but you should always have funds for it, such as extraordinary pay or higher income." If 5.7% of those surveyed by the comparator ask for a loan to face the January cost, 58% will pay their expenses with the card, 27% will split the expenses, and 8% will use special forms of payment, like those offered by stores.
Fractioning the payment or returning only a low percentage of the debt carries many risks. "If we have a debt of 2,000 euros and a fixed payment of 200 euros per month that includes interest, for example, we would be amortizing it in 11 or 12 months; but if we add another 2,000 euros to the debt, with the same quota, the cost of the interest goes up and we would spend the total in 25 or 26 months. " His advice is to "keep control of the debt and adjust our payment method to this amount". In short, "if Christmas or return to school generates a debt, we are aware of it and control the way to return it."
Anyway, in these cases Souto suggests using the plastics very carefully. "They must be a product of last resort", ditch.