How long will it take you to pay for this festive season?

December 19, 2019 | Luke Wade

Before we go on it is important to preface this article by acknowledging that we are not financial planners and do not intend to give any form of financial advice in the text below. However, planning, budgeting, and as most of our friends regularly tell us, being downright tight-arses, is something we as Accountants, are typically stronger at than most. 

After all, one of the best, and at times most difficult parts of our jobs is working with clients from all financial persuasions. At the end of the day, if you work in our industry long enough you are bound to pick up some pretty handy do’s and don’ts about money management along the way.

One of the biggest don’ts, without a doubt, is uncontrolled credit card debt.

A few facts for you:

According to, in 2018 Australia’s average interest-accruing credit card debt (that is credit card debt that is not paid off by its due date) was 32.5 billion – yes billion, with a ‘B’.

That worked out to an average of $2,007 per card (and a whole lot of revenue for our banks).

According to the same study, a tad over 70% of adult Australian’s owned a credit card.

In a world where averages are key, that means that over 70% of our adult population are more than $2k in arrears on a credit card.

Staggering really for a country whose average full-time wage ($80,493) is 30% higher than the world average (per a report by the Organisation for Economic Co-operation and Development).

The reality is Australian’s love to spend.

Another reality is that this time of year spending can spiral if you don’t control it.

To many, a $2k credit card balance may not seem all that out of hand. After all, the trends above aren’t new – Australians have been drowning in credit card debt for years now.

However, it’s super important to understand how long a $2k credit card balance can set you back.

Let’s be accountants for a second and count some beans.

For the purpose of this exercise, let’s assume your single, live by yourself, are earning the average full time Australian wage ($80,493 according to the Organisation for Economic Co-operation and Development), and have a credit card balance of $2,007 at an interest rate of 18%.

On your salary, you’ll be earning roughly $1,548 per week.

First off, we need to tax it – there goes the first $372. $465 if you’re repaying a HELP debt or student loan.

Next to go is your rent (or mortgage) – shall we say $420, which is the average for Metropolitan Melbourne for the September 2019 quarter.

Of course, you need to heat and cool the place, as well as pay for running water, insurance and internet. Shall we say $100 per week.

Now let’s factor in transport, say $200 per week by the time you pay for fuel, rego, insurance, repairs, tolls and any finance repayments.

You need to eat, let’s say $200 per week.

You’ll also need clothes, maybe $50 per week if you spread your purchases evenly across the entire year.

Obviously, you’ll need some subscriptions (who lives without Netflix or Spotify these days) – let’s say $30 per week.

A gym membership? There goes another $15 at least.

After you give yourself $100 per week for social spending (dinners, nights out etc) and we assume you don’t have a student loan, your left with a measly $61.

If you allocate that $61 to your credit card balance of $2,007 every week, it’ll take roughly 34 weeks to pay the balance back to zero.

Now, lets assume that, like us, your Christmas holidays end on the 9th of January and you start churning away at the credit card debt immediately, you’ll pay off the balance on the 3rd of September 2020.

The festive season is not so festive when you’re still paying for it 9 months later! And that’s assuming you don’t book any holidays, reward yourself with some retail therapy, decide to get married, have kids or have any other blowout during that time.

The moral of this story is that the financial decisions you make today can have a significant impact on your short and long-term future.

So, what’s your accountants’ advice as we head into the greatest, and most expensive time of the year:

Merry Christmas from the team @ LBW Advisory!