Business

New Year's debt resolutions 2020

Have you built up a pile of debt after your Christmas spending?
Peter McGahan

THERE is perhaps nothing more sobering as January's credit card bill, especially now we can ‘tap' our way through bars at Christmas.

I'll dedicate this column to debt and managing it with further resolutions for next week.

As I explain to my daughters, you can spend your life in ‘control time' or ‘reaction time'. Which is the more stressful?

Controlling debt, and controlling spending is akin to trying to avoid a black hole, with the lure of ‘how you could look and feel' next to that meaningless head-messing perfume advert.

The psychology of spending is everything. As you are faced with getting out of the house for some sanity for the January sales in December, there are some key disciplines:

January sales, are of course twaddle, with prices having been manipulated during the year to look good. Better to leave it until early February when the plentiful staff are causing a financial headache to the store, and everyone's December credit card bill has wiped out January's pay cheque, leaving stores ghost-like;

Do you really need what you are about to buy? I was in a store once when I heard a young customer say “I need that...” The lady beside me said: “Need? Really? The last time you needed anything was to go to the loo”.

Avoid the comparison of how anyone else lives or looks. It will cost you dearly. Those on social media showing off their new iPhone ‘96' probably can't afford it. Think you are impressing them? No. They are too busy looking at their ‘likes' to see your new socks;

Remember the corporations seeking an upward only share price have planned product obsolescence as their goal, so it's not long before the new shiny thing fades and breaks, and that's by design;

Consider changing how you think about purchases. Buying ‘things' shouldn't be measured in pounds, it should be measured on how much life you exchange for it. A £200 net cost is from gross income and ‘x' hours of work.

That's the sacrifice, and it's well worth realising (as early as Santa disappears) that its four whole days of someone's life to achieve the temporary happiness achieved when that shiny, crinkly present is opened.

Therefore, if we buy things we don't ‘need', we are selling things we do need (time);

Where is the inexpensive happiness? Most research points to the fact that happiness in a purchase is in that temporary moment when we purchase a product, where we simply stop wanting for a few moments.

Maybe the key is to control the wanting?

Interestingly I asked my children what they thought of my late mother. They liked her. “She was nice” they said. I asked what presents they received and they didn't know. They said “She did stuff with us” and they could remember various memories, which is perhaps why research points to happiness coming from exactly that: making memories.

Naturally we can't of course get away from the joy of giving, that can't be challenged, and there isn't anything better than seeing the look on the face of a child/partner/parent when they see what thought you have put into the purchase. The pain is in the ongoing cost and stress for those who cannot afford to pay for it, so it's all about controlling that.

Psychologists around the world have looked at the psychology of happiness and where purchasing sits within that.

They found that one of the greatest givers of happiness is ‘gratitude'. Simply being thankful at the end of the day for what and where we are, how we arrived there, and who helped us achieve that.

My greatest success in life to this day, was to flip purchasing over, and each birthday, insist my late mum didn't buy me anything, but instead I bought her flowers, after all it was her to be thanked for that hard day's work.

So consider purchasing a gratitude diary where you write in the back what you are grateful for and in the front what you learned. 2020 Christmas would make great reading.

:: Peter McGahan is chief executive of independent financial adviser Worldwide Financial Planning, which is authorised and regulated by the Financial Conduct Authority. If you would like any advice on debts or mortgages call Darren McKeever on 028 6863 2692, email info@wwfp.net or visit www.wwfp.net.

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