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This is a sad statement but it is unfortunately true. Many Canadians assume most of their debt at Christmas time. The need to find that perfect gift for a loved one, compete with other parents for the best parent award for biggest and best gifts and the desire to show how generous they are. Christmas puts a significant strain on the family unit and the bills can take upwards of 12 months to pay down.
Excessive spending over Christmas will fuel personal bankruptcies in the first three months of the year, a report says.
Chartered accountant Grant Thornton predicts that 28,000 people will become insolvent during the first quarter of the year, a third of whom are expected to file for bankruptcy as a direct result of debt racked up over the festive period.
Mike Gerrard, head of its personal insolvency practice, said: "Sadly, many individuals spend up on credit at Christmas and pay no heed to the financial warning bells."
"Come January, people find themselves in a situation where previous financial woes are compounded by the bills arriving from the festive season and in these situations insolvency becomes the only way out."Personal debt woes are expected to worsen as banks continue to tightening their lending criteria, the housing market slows and rising commodity costs begin to bite. The tighter lending conditions could add pain to consumers already mortgaged to the hilt, and household finances look set to be stretched further by rising food and energy costs, as wages fail to keep pace with inflation.
Preparing a budget is fairly easy and it can even be fun if you want it to be. Sticking to this financial plan is often the more difficult part. Unexpected expenses crop up through the year and ruin your best laid plans. If the budget has extended its boundaries by Christmas do not give up, look around for imaginative debt solutions.
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