The Hidden Dangers of Holiday Spending: How to Avoid Debt and Make Lasting Memories
As the holiday season approaches, many of us are eager to shower our loved ones with gifts and create lasting memories. However, the financial burden of holiday spending can be overwhelming, leading to significant credit card debt that can linger long after the festivities are over.
The Alarming Reality of Holiday Debt
A recent survey by NerdWallet found that 28% of shoppers who used credit cards last year have yet to pay off their holiday purchases. With credit card debt already at a staggering $1.14 trillion, the stakes are higher than ever. This year, spending is expected to increase to a record total of $979.5 billion to $989 billion, with the average shopper projected to spend $1,778.
The High Cost of Credit Card Borrowing
Credit cards are one of the most expensive ways to borrow money, with the average credit card charging over 20% interest – near an all-time high. As Howard Dvorkin, a certified public accountant and chairman of Debt.com, notes, “Somehow it’s been programmed into the American consumer that essentially says ‘I have to spend a lot of money on people I care about.’” But it doesn’t have to be that way.
Breaking the Cycle of Debt
So, how can we avoid the debt trap and make lasting memories without breaking the bank? According to Candy Valentino, author of “The 9% Edge,” it’s all about setting a budget and tracking expenses. By reallocating funds from other areas, such as canceling unwanted subscriptions or negotiating down utility costs, we can make room for holiday spending without taking on new debt.
Strategies for Smart Holiday Spending
Valentino recommends starting holiday shopping early to take advantage of early deals and discounts, pooling funds among family or friends to share the cost of gifts, and curbing temptation by staying away from the mall and unsubscribing from retail emails and social media. Consider investing in individual stocks or bonds, or making a charitable donation instead of buying gifts. Making something from scratch, such as cookies or a candle, can also be a meaningful and cost-effective way to show you care.
Conclusion
By being mindful of our spending habits and making a few simple changes, we can avoid the financial stress of holiday debt and focus on what truly matters – creating lasting memories with our loved ones. So, let’s break the cycle of debt and make this holiday season one to remember, without breaking the bank.
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