Don’t let Black Friday debt land you in a crisis

Black Friday debt

With Black Friday, and obviously Christmas, now just around the corner, we thought it was an appropriate time to write a blog discussing the potential pitfalls Black Friday can bring with it – falling into Black Friday debt being perhaps the most significant of them.

In 2019, in the UK, we collectively spent £5.5bn over the Black Friday weekend. And this year, it’s projected to increase to c. £6bn – and that’s despite the effect of covid on the nation’s shops and finances – as consumers are expected to flock to online sales in their droves.

But this projection comes at a time when average household debt in the UK is soaring – thanks, in no small part, to covid and its ramifications. The current average household debt figure in the UK is £60,526 per household, £31,972 per adult; a staggering 111.5% of the average wage in the UK, with borrowers in the UK paying a cumulative £124m a day in interest during August 2020.

According to figures from The Money Charity, countrywide, the UK’s household debt (figure correct as of August 2020) totals a mind-numbing £1,684 billion! Up £26.2bn on last year.

So, how do we avoid getting drawn into further debt by the seemingly unignorable deals available over the Black Friday weekend? Indeed, should we even be spending over the Black Friday weekend?

And, with Black Friday falling on what, for many of us, is the final payday before Christmas, it’s all to easy to get sucked in to spending more than you can afford in the sales. But, if you follow the steps below, you should be able to emerge unscathed.

Don’t spend it if you haven’t got it

Now, this may seem obvious. However, given the startling figures detailed above, it’s clear that many of us struggle not to do this.

Regardless of how good a deal may seem (they aren’t always, more on this later), if you don’t have the money in the bank, then don’t spend it.

Avoid the temptation to take out payday loans, use your overdraft or use your credit card to pay for things if you don’t have the money – these actions will simply leave you paying for the spending at a later date, and (with the possible exception of using your overdraft) are very likely to negate the discount you got on the item with the interest you’ll pay.

Pay your bills first!

Again, another statement that may seem exceedingly obvious. However, given the pressure that many people feel to spend during the Christmas period, this can often be overlooked. Don’t feel tempted to keep up with the Joneses…

Spending money you should be paying bills with, leaving your bills unpaid, is a sure-fire way to begin the journey into problem debt.

Far from feeling like Scrooge or the Grinch if you don’t spend big on Christmas, take the moral from the story instead: Christmas is more about your loving presence than your expensive presents. And those you love will be understanding of your situation if you can’t afford to spend big.

Don’t ‘stick it on the credit card’

We’ve already touched on this one, but it’s definitely worth reiterating.

Credit cards typically charge in the region of 17-25% p/a interest on spending made on them, so think about your purchases. Would you buy the item if it cost you an additional 25% (in many cases, this is more than the discount was anyway!)? Because that’s effectively what you’re doing if you’re not paying off your credit card bill until later.

Overspending on your credit card is one of the easiest ways to find yourself spiraling into problem debt, so if Black Friday is only an option for you on credit, don’t do it if you’re not paying your credit card off in full every month.

Budget for your spending

This, really, should go without saying all year round. That said, it’s particularly important if you’re planning a Black Friday splurge.

Try to plan what you need to buy and who you need to buy for, work out how much you can afford to spend on every person/item on your list and don’t go over this amount.

The more detail you add to your budget, the more likely you are to stick to it when it comes to spending.

If you stick to your budget, you’ll avoid going into debt as a result of your Black Friday spending.

Check for the best deals

So, once you’ve drawn up your budget, make sure you’re not overpaying for your Black Friday deals. Some of the less scrupulous retailers have been known to list items at above market value prior to sales, so they can sell them at a smaller ‘real’ discount, whilst advertising a much more impressive saving.

Also, check Google shopping for price comparisons across different retailers, you’ll save money if you don’t just go with the first deal you see, a couple more clicks will likely find the item you’re after cheaper somewhere else.

And finally…

There’s an app for that

There are loads of Black Friday apps out there, that will automatically help you to compare prices and source the best possible bargains. Download one and make sure you’re getting the biggest discount you can!

Get help if you need it

If black Friday debt, or any other debt, is causing you problems – get help! You’re not alone. The figures above show just how much debt is in the UK per adult, so don’t feel that this is a problem reserved only to you! We are here to help.

Take our 30 second debt solutions test and we’ll call you to run through what options are available to help you start your journey to debt-free.