Avoid starting New Year in debt

"If you spend too much at Christmas, it means falling behind on your debt repayments in the new year," says NCR manager Darrell Beghin. "Not planning ahead for festive season expenses is one of the main reasons people slip further into debt.

"While it's easy to get drawn in by the marketing and advertising hype and to overspend during the festive season, the most important thing is to avoid borrowing to fund expensive gifts and holidays. Putting gifts under the Christmas tree is a good idea if you've budgeted for them, but if not and they are bought on credit, come 2012, you'll be left with high bills with interest repayments."

Interest rates can be as high as 22.1% on credit cards and store cards and as much as 32.1% on personal loans. This is interest only and does not include other fees such as service fees, initiation fees etc.

She says one of the first steps to take is to draw up a budget, planning how much extra you want to spend over the festive period. Your budget should include living expenses such as rent, lights and water, insurance, debt, school fees, stationery, school uniform etc and make provision for savings. "Don't forget to take your bonus into consideration."

Christmas often involves entertaining as well as buying presents and donating to charities, so it is important to make sure you make provision for all unseen expenses. Compare this to your income and see if you really can afford it.

If money available, after the payment of essential expenses is not enough to pay debt, consumers are advised to cut or adjust their spending. Cutting or adjusting items such as entertainment, alcohol, gambling or Pay TV can help. "If you find that you still cannot make ends meet, you need to speak to your credit providers about your situation. Consumers should not wait until they receive final demand letters from credit providers," she concludes.