By the time you read this, you might have already spent quite a bit of money shopping for great deals in the Black Friday sale, and there is still Cyber Monday to come.

Christmas is just weeks away, so now seems as good a time as any to splurge with a vengeance.

After all, the pandemic has resulted in many of us saving quite a bit of money that would otherwise have been used for overseas holidays at this time of the year.

So supporting local businesses by shopping with that extra cash is certainly a good way to feel festive as the year draws to an end.

But before you log in to put even more items into your online shopping cart for the Cyber Monday sale, ask yourself this important question first - do you have any outstanding debt on your credit cards that you have not cleared for the past few months?

If your answer is "yes", do yourself a favour by emptying the shopping cart and putting an immediate lockdown on all non-essential purchases until you have cleared every cent of the old debt first.

"Non-essential" means you should not spend on anything unless your survival is dependent on it, such as basic food items and utility bills for you and your family. Your urgent priority is therefore to pay off this debt first before you incur more expenses.

Yes, this seems drastic, but you will thank The Sunday Times Invest later for this advice as it can save you from possibly falling into a debt trap that is hard to get out of.

The clearest sign that you are at risk of such a trap is that you have a credit card debt that you cannot pay off immediately. If you allow this debt to grow and fester, it will ruin you slowly and surely.

Many do not realise that the No. 1 cause for people falling into serious financial trouble here is not gambling or bad investments but the seemingly harmless act of overspending to indulge themselves.

When you gamble or invest, you usually know you are in trouble when you lose all your money. Things won't become worse if you do not borrow and continue with the losing streak.

Overspending, on the other hand, is far more insidious because it can happen to seemingly responsible people.

What makes it worse is that those who overspend usually do not realise they are in trouble until the debt is big enough to choke the life out of their financial well-being.

By then, it will usually be too late for them to do anything to help themselves.

Over the past decade, Credit Counselling Singapore (CCS) has seen more than 10,000 people who have fallen into financial trouble due to overspending.

The number represents almost half of all cases that the guardian angel for debtors has helped.

Many of these folks are still working to pay off their debt, which range from about $50,000 to a few hundred thousand each.

This figure does not include many others who struggle on their own because they do not agree with the CCS' non-negotiable condition, which is to terminate all their credit cards.

An OCBC Bank survey found that close to 30 per cent of credit card holders here pay only the minimum sum, which means they are accumulating more debt every month.

Overspending on daily expenses

A common myth is that people who overspend usually buy many luxurious items. The reality is actually more worrying because those in trouble mostly chalk up common expenses.

Here are some examples:

Dining out

Few people will opt for the cheapest meals at hawker centres when they are at work.

Those working in the central city area can easily spend up to $20 on each meal. And if you eat out often, especially, with the whole family during weekends, your monthly dining bill alone could be a few thousand dollars, if not a lot more.

Don't believe it? Just keep all the receipts for a month and you may be shocked.

Transport

People used to refrain from calling for cabs unless they needed to go somewhere urgently or to the airport. Now many hail rides the moment they step out of their homes without realising they are in the process of incurring a hefty sum each month.

If you do this all the time, you may actually be spending more on transport than on other expenses.

No wonder a young local bank executive, who presumably earned a few thousand dollars a month, had to steal from a customer - she was jailed last year - all because she needed more money for her transport and dining out.

Holidays

There are many folks here who used to fly out for a short getaway whenever a long weekend beckoned. If you ever wondered how they could afford to do so when you couldn't, it is because many people charge their holidays to their credit cards.

It does not matter even if you earn a decent salary - if you spend on frequent holidays, you will find yourself short one day.

Invest recently featured a high-income couple who ended with debt of a few hundred thousand dollars, all because they travelled too frequently to visit their children, who were studying abroad.

It's just maths

You know you are going to be in trouble soon if you earn say $6,000, but spend $6,001 every month.

It does not matter even if you earn 10 times more - so long as you overspend your income and rely on credit cards to fund your expenses, the debt is going to catch up sooner or later.

Take a person who earns $5,000 a month but spends $10,000 on a family holiday. If he is disciplined enough to pay $1,000 monthly and does not incur additional charges, this sum will be cleared in about year.

If not, this debt can easily spiral out of control due to an extra 2 per cent interest that is added to the bill every month.

Many people do not realise that it does not take a lot to put a person in financial ruin - just imagine you earn $60,000 a year but have a $60,000 credit card debt.

Even if you don't spend a cent for a year, which is impossible, you won't be able to clear this because the interest on this sum alone is more than $14,000.

It is actually easy to end up in a debt trap if you do not clear your credit card expenses every month.

Even if you only owe $5,000 on cards and you choose to pay only the minimum sum of $50 every month, you will need more than 14 years to clear this debt. By then, you would have spent $3,800 on the interest alone.

This is how all those who sought help at the CCS ended up in trouble, and this is why CCS needs them to cut up all their cards.

So does that mean that the Christmas holiday is going to be bleak if you have to watch your expenses?

The recent Covid-19 lockdowns should have taught all of us a few ways on how to have a good time at home for a whole lot less.

For instance, a small family can have a delicious and healthy meal of a whole roast chicken ($4.90) and salad for under $10 from a nearby supermarket.

And the family can watch many good classic movies together that are free on popular streaming sites such as YouTube.

So even if you have to cut your expenses, who says you can't have fun while doing it?