Credit Card Spend vs. Holiday Trend

When I walked into the Home Depot earlier this week to pick up some lawn treatment ahead of the winter season, I saw what some love while others loathe – the setting up of the Christmas trees. Yes, the retail holiday season is here with its typical holiday cheer and deals soon to be incoming, attempting to coax out of you every hard-earned dollar you have earned. Harder still, relationships with friends and family can add a significant amount of perceived expectations and stress when it comes to holiday spending.

This is why it is important to have a plan when it comes to your holiday spending – to avoid the surprises and the emotional decisions that can drive you into debt well after the parties are over in January. And February. And March. In fact, according to WalletHub in November 2023 approximately 25% of Americans were still paying off debt from 2022 (DeVon). If you don’t want this to be you, here are some key tips to take the reins back from Santa this holiday season.

1. Tighten the list of who you’re buying for and how much you are budgeting.

It is a common mental anchor to feel the need to purchase gifts for many people, particularly family, during the holiday season. Oftentimes, there can be concerns about feeling guilty, or of being perceived as cheap, if you don’t participate entirely and completely. For others, there is a vision or desire to shower people around them with gifts and be perceived as well off, even if they cannot afford to do so. However, people who love you and care about you should not want you to go into debt and potentially hurt yourself financially just to buy them a gift.

This is where some solid editing can be very beneficial by limiting who you buy for and setting a realistic budget. By only purchasing gifts for those closest to you, you can avoid a form of financial death by a thousand wrapping paper cuts, shedding hundreds if not thousands of dollars of spending on the 17 nieces and nephews whom you never see. Just make certain to communicate with family and friends – not only will this help promote consistent expectations, but it may actually help those around you also feel less financial pressure during the holidays.

2. Consider a gift exchange for larger groups.

An alternative to every relative purchasing for every other family member and everyone going collectively broke is to have a gift exchange. That can be people being assigned one or two people to purchase for, or you could choose to get inexpensive items for a white elephant gift exchange and enjoy some quality laughs without the financial pressures of buying gifts for everyone. These are also good solutions for the workplace, where again there may be pressure to not leave anyone out.

3. Handmake your gifts to add a personal touch and save money.

Handmade goods can be a great way to share something from the heart that your friends and family will enjoy while saving money doing so. That can be as simple as making a nice batch of cookies in a plastic bag, or you could get more fancy by making candles, soaps, or our favorite in the Briggs household – pepper jelly, which has festive speckles of chopped red Fresno and green Serrano peppers in it. Or perhaps for the holiday party, you can make a wonderful adult Lunchable . . . err . . . charcuterie board.

4. Avoid having “treat yourself” become a holiday lifestyle.

With all the stresses of having family over, or traveling to see people, it can be very easy to get hooked on the conveniences offered to us to help enjoy the journey (Starbucks). Being mindful of how much you are spending on eating out, coffee, and convenience store purchases can help lower the holiday expenses even with the costs of travel. Packing snacks and making coffee at home or in your hotel room can help you save hundreds this holiday season.

5. Make saving money a holiday goal – and stick to it!

There is no rule written down that says that you cannot save money in the fourth quarter of the year. You can make a deliberate goal to save extra during the last months of the year. If your emergency fund needs some work, that can be setting up an automatic deposit into a high-yield savings account. If your emergency savings is doing great, then consider increasing your 401(k) or other investment account increases. And as mentioned before, the more you can automate, the easier it can feel to save money and actually make progress because the money is saved before you have the opportunity to spend it.

Conclusion: Careful consumption is key this holiday season.

The U.S. economy has some significant economic concerns and weaknesses. Nearly 11% of all credit cards in the United States are 90 days or more delinquent, meaning that approximately one in nine accounts are not even making interest payments on their debt; this is 36% higher than a year ago. Unemployment is rising according to the Federal Reserve (September 2024), and job openings are at a near-three year low going back to January 2021 (U.S. Bureau of Labor Statistics, October 2024). With such a tenuous backdrop and heightened uncertainty heading into 2025, it is so important that you make mindful decisions so that you avoid the temptations that can compromise your finances and your future. 

References

DeVon, C. (2023, November 23). 25% of Americans still have holiday debt from last year: “If you’re in a hole, stop digging,” says money expert. CNBC. https://www.cnbc.com/2023/11/23/wallethub-25percent-of-americans-still-have-holiday-debt-from-last-year.html

Job Openings and Labor Turnover Survey. (n.d.). U.S. Bureau of Labor Statistics. Retrieved October 1, 2024, from https://www.bls.gov/jlt/ 

Unemployment rate. (2024, September 6). https://fred.stlouisfed.org/series/UNRATE 

US credit card accounts delinquent by 90 or more days Quarterly analysis: Household Debt and credit Report | YCharts. (n.d.). YCharts. https://ycharts.com/indicators/us_credit_card_accounts_late_by_90_days