Tips to curb revenge spending and avoid a debt trap this festive season

Planning your expenses and comparing offers is a good way to start; use your plastic wisely and don't buy every claim the manufacturer tries to sell you

Things are getting back to normal after over a year of Covid-19 induced lockdowns. Shops and malls are opening up and there are hosts of offers coming from merchants. If you like shopping, you might now indulge in ‘revenge spending’ this festive season. This is a time when you loosen your purse strings and shop, spend and enjoy with family and friends. However, while spending you would do well to ensure you are not saddled with debt. Here are a few tips you could follow so that you do not end up regretting your spending spree.

Make a plan

Planning helps avoid most disasters including debt pile up. Take stock of the situation at home and make a list of things that are required. “Try to work out a budget to curb impulsive spending.  Also, prepare a list of items/intended spends and allocate budget for each items. This will help you not to overspend,” Anil Rego, Founder and CEO, Right Horizons, said.

Focus on needs

The foremost step towards curtailing your spending urges is to distinguish between ‘needs’ and ‘wants’. After the Covid-19 a lot of things that were 'wants' earlier, such as high-end mobile phones or laptops have become needs. “Focus on what you need and then go about buying accordingly,” Aditya Damani, Founder, Credit Fair said.

Identify true deals

Availing discounts is good but do not get carried away by the offers. “Once you have identified the products you need, compare the offers on the internet. Do not forget to check the bank offers on payments and avail higher discounts on the same,” V Swaminathan, CEO, Andromeda and Apnapaisa, advised.

Use card judiciously

Credit cards are the most common methods of payment today, online or offline. However, though they are a convenient means of payment, overuse can also land you in trouble. “While you may use credit cards to get various discounts, ensure that you limit spends to what you had budgeted. Use your credit cards in a way that you always are able to make the whole payment by the due date.  Credit card interest rates on outstanding are the highest,” Rego pointed out.

Borrow smart

Though taking a loan to buy isn't advisable, it may be necessary at times. For example, you may need to buy a powerful laptop for your child’s educational needs.

If you decide to borrow, then make a plan to repay the loans on time. If you have already swiped your card too much and you cannot repay your credit card outstanding, then it is time to talk to your bank. Ask for a loan on a credit card, if you do not have access to other cheaper loans. Convert your credit card loan in EMI.

“If you have overspent and are finding the repayment difficult, convert the credit card bills into EMIs,” Swaminathan says. "However, you should ensure you don’t borrow beyond your repayment capacity to avoid falling into a debt trap."

Know your stuff

Buyers should be aware of what they are buying and not go by the claims of manufacturers or retailers. “Understand the terms and conditions for the offer before purchasing. Check the quality of the product if purchased offline. In the case of online offers, check the quality after delivery,” Swaminathan said.

Brick-and-mortar shops often match the prices available online. More importantly, you can touch and feel the product and they deliver the goods almost immediately. For electronic goods and high-value consumer products, there are many bloggers who write reviews. They do mention the price of the goods reviewed. You will get a fair idea about the true discounts.

How to keep a tight rein on spendings

• To curb impulsive spending, make a list of items that you need
• Write the amount you intend to spend on each item
• Compare offers on the Internet
• Factor in discounts from banks and other financiers as well
• Read up reviews on the Internet, especially before the purchase of costly white goods
• Converting your credit card outstanding into EMIs can help reduce the interest rate you have to pay