A recent survey shows that roughly one half of Americans have a holiday spending budget.
Almost 45% will make holiday purchases using a high-interest rate credit card.
Even though 54% said they would pay off the purchases immediately, these complex and uncertain economic times could bite people if something were to happen to their money stream.
Still for the percentage of people who don’t budget the holidays are a boom and bust cycle that takes months to finally pay off.
“If you don’t have the money don’t spend it. If you have to charge it, then you have to re-think—that might be the best advice,” UNO Professor of Economics Walter Lane says credit cards are the fastest way to get yourself into financial trouble—especially at this time of the year.
“Individuals who are [financially] tight, I think they need to just be honest with themselves and try to reduce their spending with regard to their budget,” Lane says.
A lot of people spend themselves into debt to uphold appearances, according to Lane. He says to resist this temptation, especially in these complicated financial times.
“I think part of this is a feeling of social obligation,” Lane explains. “Even if I’m feeling tight I don’t want other relatives to know it. So if my relatives don’t get presents this year and I explain it to them they would forgive me. But I don’t want them to talk about it!”
Lane says credit cards are the fastest way to get yourself into financial trouble—especially at this time of the year.
“Credit card debt is what you really want to avoid. Those interest rates are very high. If you’re not getting a solid income, you don’t want to be running up credit card debt right now. So, I would say you try to restrict yourself to cash spending.”
Lane says American’s are not very good at budgeting. But he says in these uncertain times, people need to budget their holiday spending and stick to it to avoid credit card shock come January.
