How to pay for Christmas if your finances are stretched

If you're planning to fund Christmas expenses by taking out a personal loan or pausing your mortgage repayments, it's important to crunch the numbers first.

With a personal loan, you may end up paying hundreds or even thousands of dollars worth of interest over the course of the loan term. Furthermore, the money would probably be spent on things that didn't deliver any capital return, such as presents or holidays. That doesn't mean you shouldn't use a personal loan – just that you should weigh up the pros and cons before doing so.

With a mortgage freeze, don't forget that the lender would pause your repayments but not your interest charges. So when you resumed repaying your mortgage, an even higher interest bill would be waiting for you, which means any repayment holiday could cost you hundreds or even thousands of dollars. That's why you should think carefully before going down this path. As part of the deliberation process, you're welcome to contact me for help.

10 other ways to improve your finances

Many people are dealing with cost-of-living pressures, which is why some will be thinking about personal loans and mortgage freezes to get them through Christmas.

Here are 10 other options worth considering:

1. Speak to your close friends and family members about setting a present spending limit, so you can all save money without embarrassment.
2. Offer your time as a gift – you could promise to babysit someone's kids during 2024, for example, or mow their lawn every month.
3. Offer your skill as a gift – you could gift a free 2024 tax return if you're an accountant or free piano lessons if you're a musician.
4. Sign up for an online 'freecycling' group – members give away quality items that they would've otherwise thrown out.
5. Use coupon websites to find promo codes for items you were planning to buy online.
6. Take a domestic rather than an international holiday.
7. Save thousands of dollars by arranging free accommodation through a house-swapping website.
8. Make a list of free community events where you can take the kids.
9. Cancel subscriptions and memberships that are delivering minimal value.
10. Consider selling items you rarely use, such as furniture, electronics and sporting equipment.