Budgeting urged to avoid debt

The temptation to overspend during the Christmas period is almost unavoidable, but Marlborough financial and legal advice organisations are warning against building up this debt.

They say it should be avoided, especially for anyone who already has unpaid bills.

Marlborough Family Budgeting Service co-ordinator Fiona Patrick said the organisation had noticed a large increase during the past two months in the number of people getting help with budgeting and paying creditors.

While she encouraged people to use the service, she said that dealing with debt just before Christmas was particularly difficult and often a result of poor financial planning.

"The most important thing is to make sure that you can pay for the basics - food, rent and power, then see what extra there is, and come to see us to work out a budget."

While people should have started budgeting for Christmas months ago, this was a good time to start planning for the new year and the extra costs involved. One important step was not to incur new debt with Christmas shopping.

"Often people don't even look at their debt over Christmas, and then when January rolls round they find they have a problem."

Community Law Marlborough manager Gordon Strang agreed, saying people sometimes got out of their depth with credit arrangements.

The number of clients getting advice with credit contracts usually increased after Christmas, indicating people spent money they did not have, most often during the lead-up to the festive period, he said.

They felt this debt in the new year, sometimes with heavy consequences, such as items like televisions and cars being repossessed.

He encouraged anyone working to repay debt to look hard at what they can and cannot afford, and simply not generate new debt for the sake of buying expensive presents.

Ms Patrick said Marlborough Family Budgeting Services had seen 228 new clients this year and had to stop taking on new clients.

Of the new cases, 160 were ongoing "complex clients" working towards paying off debt to multiple creditors.

"We have seen a dramatic increase in the number of complex clients. One of the reasons for the increase in clients this year may be that more people are aware of our services."

Both she and Mr Strang encouraged people to get advice on budgeting and legal advice as soon as possible.

"Too often we see people when it is too late to help them because they simply don't have the income to service their debts.

"Everyone should be running a budget, but the minute you have that first unpaid bill you should come and see us for advice so that the problem doesn't snowball," Ms Patrick said.

For more information on budgeting after Christmas and into the new year, visit familybudgeting.org.nz.

The Marlborough Express