Taking on Debt Due to Holiday Spending? Join the (Large) Club

If your holiday-season associations are less about “peace on Earth” and more about “sales on stuff,” it’s really not your fault.

After all, retailers spend these months saturating all forms of media with ads designed to convey the idea that the only way to truly enjoy the season is to buy more, do more, and spend more. Maybe a lot more.

Of course, the problem with that pressure — it’s only once a year, you can splurge — is that many people can’t actually afford nearly as much gift-buying, party-throwing and traveling as they wind up doing. During the 2018 holiday season, 58% of Americans exceeded the $500 mark when it came to holiday-related spending on things such as gifts, travel, meals, and parties, according to a survey from MassMutual. About a third of people who hit that spending threshold took on credit card debt to cover those seasonal expenses, while 38% said they tapped their savings.

Many Americans buy things they can’t afford during the holidays. Image source: Getty Images.

The pressure to buy

The real Black Friday came relatively late this year, but many retailers started their holiday promotions before Halloween, then amped up the intensity throughout November to that peak period from Thanksgiving night through Cyber Monday.

Compounding the pressure are our desires to come up with just the right gifts for everyone (pricey), visit as many people as we can (travel expenses), and attend all those special events (ticket prices/restaurant tabs) and parties (can’t show up without something for the host). You will never see a business running holiday ads imploring you to mind your budget. And beyond the flood of commercials, our overspending impulses are often exacerbated by the images we see from influencers and others on social media.

It all leads naturally to people making short-term decisions that have longer-term consequences.

“As much as I value social media in my business and personal life, its level of influence can be scary,” said MassMutual Head of Insurance Operations Amanda Wallace in a statement to the Motley Fool.”Seeing that one of the reasons why many spent beyond their means last holiday season and are willing to do it again this year because of what they see in social media is a wake-up call to slow down and think purchases through.”

How realistic is your holiday plan?

On the positive side, the MassMutual survey found that 71% of Americans have set budgets for their 2019 holiday spending. The problem is that a “budget” funded by credit card spending you can’t immediately pay off trades instant gratification for longer-term problems.

“Holidays should be a time of joy, reflection, and optimism for the future,” said Wallace. “Instead, for many, it’s a time of racking up debt, stress and overburdened schedules. Take a moment to think through what is most important to you, your family and friends to help decide what events and gift selections would be most meaningful.”

Many of the things we value the most don’t cost much. Analyze your financial situation and the debt you may already be carrying, and budget accordingly. If that means that the gift some of your loved ones and friends receive from you this year is primarily time spent together, that’s OK.

Be open with people about your intention to enjoy a more fiscally responsible holiday season. Your example might even encourage them to make smarter spending decisions this year, and put themselves in better financial shape next year. And that’s a better gift than an ugly sweater and a new video game, whatever the season.

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