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Christmas expenses can be overwhelming, but there is a way to avoid overspending and even save more during the festive season.

According to Mozo.com.au during Christmas last year, Australians put more than $26.8 billion on their credit cards with an average debt of $4,697 per cardholder, which amounts to a lot of spending at this time of year.            

There are great ways to be frugal before, during and after the holiday season and by putting in that extra effort, you could put those savings to good use by paying a chunk off your mortgage before 2016 begins – not a bad way to start the new year!

1. Create a Christmas savings account: If you have one account where all of your expenses and income comes from, it can be hard to keep track of how much money you have to spare for Christmas. A separate savings account just for Christmas expenses will give you a clear idea about how much money you actually have available for spending.

2. Eliminate non-essential items: Now more than ever it is important to eliminate smaller, non-essential spending. The morning coffee or the daily lunch can add up every week and there are cheaper alternatives. Work out how much you could save by eliminating these to put towards your Christmas spending or savings.

3. Match dollar for dollar: If you are really determined to take a chunk off your home loan, then try and match every dollar you save for Christmas and put it towards your mortgage. If you’re not able to spare that much, try to work out a percentage that you can put away and stick to it.

4. Use your home loan: If you have an offset account, now is the time to put it to use. It would be a good idea to put any extra cash that you save for Christmas into your home loan offset account as it will decrease the amount of interest charged at the same time.

5. Use a Christmas budgeting app: There are a number of apps on your phone that can help you keep track of your money over Christmas. Take a look at our ‘Top apps to help you save this festive season’.

6. DIY gifts: There are so many websites, particularly Pinterest, which have a great range of DIY gifts that are cost effective, but still high quality. An example could be buying a candle making kit and create Christmas scented candles for the whole family.

7. Sell unwanted items: It’s safe to assume that just about everyone will be shopping around for a bargain in the weeks leading up to Christmas. Do you have a number of unwanted or unused items at home? Maybe they are Christmas gifts from last year you never used? If so, why not sell them? Take a look at eBay or hold a garage sale to sell unwanted items. You can use the cash to cover Christmas expenses or put the money towards your home loan.

8. Use cash: According to ABS, average household spends $675 each week on food, non-alcoholic drinks, transport, recreation and miscellaneous purchases. You may find it easier to budget if you take out a specific amount of cash and can only use that for the rest of the week. It can be very easy to swipe your card wherever you go and forget how much you are actually spending particularly at Christmas. Having physical money in your wallet could help you stop making impulse buys.

9. Avoid using credit cards: So many Australians find it easier to put their Christmas expenses on their credit card, but it can come back to bite you. If you do not repay the amount owing by the end of the month, then you will have to start paying interest. If you continue to only meet the minimum repayment, then you could be repaying the credit card until Christmas next year!

10. Check frequent flyer points: Flights often become expensive during the holiday season, so before you spend hundreds of dollars on flights, check any frequent flyer or loyalty points you may have to see if you can use those instead of money.

11. Create a secret Santa for your family: This is a great idea to help keep the cost of presents to a manageable level for the adults in your family. It can also make it a bit more fun on Christmas Day.

12. Create a cash limit: It can be hard to know how much to spend on someone and it can also be awkward come Christmas Day if some gifts are more extravagant than others. Chat with your family and discuss creating a cash limit so that you can remain under budget and no one will feel bad come Christmas Day.

13. Organise a pot luck party: If you are hosting Christmas Day, you will most likely be spending hundreds of dollars just on food. However, if everyone brings a plate of food to share, it will help reduce your expenses significantly.

14. Organise to pay bills before Christmas: Getting organised and paying your bills that are due around Christmas early means that you will know exactly how much money you have leftover to spend on Christmas shopping and there will be no unexpected surprises in January.

15. Plan ahead for next Christmas: It’s never too early to start planning for next year. You may want to consider opening a specific savings account and putting away $10 or $20 a week so that by this time next year, you will have a significant amount of money ready to use.

Lastly you could refinance your home loan to a cheaper interest rate. Although this applies to anytime of the year, a great way to save is to tackle one of your biggest expenses each month, your home loan. Although things might be hectic in the weeks leading up to Christmas, you may have some spare time after the big day. Start a list of some of the things you find hard to get around to when you are busy and aim to tackle these in your time off.

Our Lending Specialists are available to discuss home loan options whenever you are ready. Just call 13 72 62 or leave your details here for them to contact you.