It’s easy to toss fiscal responsibility to the side during the holidays to see the smiles on loved ones’ faces. In 2021 alone, more than 35% of Americans accrued holiday debt, according to a recent LendingTree survey.
Because of this, many people find themselves in financial recovery mode at the beginning of the new year.
“Holiday spending is about so much more than just observing the season,” said Monica Eaton, a certified financial education instructor and author of “Money Plan.”
An increase in debt during the holiday season occurs because people view that time “as an opportunity to build memories” with loved ones, according to Eaton.
“People often use holiday gift-giving as an opportunity to show what their loved ones mean to them,” she said. “The pressure to provide a certain caliber of gift can be intense.”
The added commercialization of the holiday season often compounds the compulsion to spend.
“Retailers ramp up marketing efforts during the holiday season, inundating shoppers with messaging and incentives that encourage overspending,” Eaton said.
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After completing Santa duties and the cloud of love-giving lifts, getting finances back on track can be a challenge. But Eaton says not to panic – while overspending during the holidays isn’t ideal, it isn’t uncommon.
Here are three steps that can help with financial recovery:
Get an accurate picture of what you spent during the season.
It’s important to keep track of all the money that has gone out and where exactly it was spent from. “If you used credit cards, loans or ‘buy now, pay later’ plans to fund your purchases, a good first step is to fully account for everything you owe.” This includes monitoring amounts, due dates and payment terms.
Look to your current budget to find money for debt payments.
“Review your budget for areas where you can make cuts for a period of time,” Eaton said. Some purchases are lifestyle expenses that feel good but aren’t necessary. Adjusting your spending in these areas will free up
cash to put toward paying off debt. A good way to look at it is that after maintaining this budget for a short period, you get to reward yourself with your “nice-to-have” items once the debt is cleared.
Set a holiday debt payoff timeline and stick to it.
“Once you’ve identified where you can find extra cash to apply towards your holiday debt, commit to a date when you will have all of your holiday debt paid off, set a payment schedule, and stick to it,” Eaton said.
For free financial management counseling, can contact Military OneSource at 800-342-9647.
This article was originally published in the December 2022 issue of Military Families Magazine.
