While red is one of the colors of the holiday season, it’s not a good look for a bank account, and experts say racking up holiday debt can lead to a cycle that’s hard to break. The average American will spend 936-dollars on holiday gifts this year – the second highest amount on record – according to the National Retail Federation. Financial planner Kathryn Greiner says the pressure to provide this time of year can lead people to take extreme measures, including turning to payday lenders.
Greiner says using cash instead of credit cards to pay for holiday purchases can help curb the tendency to overspend. She also recommends developing a written budget for next year’s holidays as soon as these are over. Many credit unions offer free financial counseling to help their members stick to their financial goals.
The urge to “keep up with the Joneses” can be particularly hard to avoid this time of year, but Greiner says spending beyond one’s means only serves to suck the joy right out of the season.
She adds that it’s particularly important for spouses and partners to have an open, honest talk about what they can and can’t afford. According to a recent survey, more than one in four Americans said they plan to rack up debt this holiday season that will linger more than a month, with two-thirds of those expecting they will need three or more months to pay it off.