Sunday, November 27, 2005, 10:27 PMDebt burden to increase
From: AAP By Sam Holmes
November 25, 2005
HIGHER petrol prices and increased reliance on credit were expected to add to Christmas debt burdens this year, as people struggled to manage household finances.
With general household debt levels already at record levels, consumers were being urged to make careful spending plans for the festive season.
Roger Mendelson, chief executive of debt collection agency Prushka, says the post-Christmas period is usually one of the company's busiest times.
"It's definitely a seasonal thing and people make the same mistakes every year," Mr Mendelson said.
"The main issue is general household debt ... in absolute terms it's at record levels but as a percentage of GDP (gross domestic product), it's probably at record levels.
"That means householders are going into Christmas with very high levels of debt before they start."
"A large part of it goes onto credit cards so people tend to overspend and they don't take into account just what they can afford," Mr Mendelson said.
"They also get their holiday pay in a lump sum so for many people it's the most money they've probably had in one hit all year and it just comes down to bad budgeting."
The high cost of petrol - despite having eased from recent record levels - was a major contributor to default levels but were rarely accounted for in holiday spending.
"Certainly the evidence from our collection staff in talking to people is that this has been the big factor," he said.
"People have had to factor in probably $40 to $80 more in some regional areas because of the distances they drive."
He said consumers needed to list their regular expenses and ensure they were covered for the period prior to making allowances for holidays and presents.
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