The headlines for Thanksgiving weekend are already declaring that this year’s holiday shopping season will be the biggest ever for retailers. From the National Retail Federation,
We are encouraged by what we’ve seen thus far with eager Thanksgiving Day and early Black Friday shoppers lining up for televisions, electronics, cashmere sweaters and toys. Reports of record-breaking online sales and store crowds point to a more confident and savvy holiday shopper who knows when, where and how to take advantage of all the promotions retailers are offering. It’s important to remember, however, that despite getting out of the gates quickly, the holiday season is a marathon and not a sprint and we expect retailers to continue to be extremely competitive as they chase after the $616 billion that is on the line this holiday season.
It is great fun to get into the spirit of giving, and buy those perfect gifts for the ones you love. But I have to tell you that I also agree with Joe Lucey, who wrote, “Save like the Grinch on Black Friday,” in which he points out that many people just cannot afford to buy Christmas gifts this year. He cites a Federal Reserve study in which they found that, “The average U.S. household credit card debt stands at $15,593.” Note that this is for “indebted households.” If you include all U.S. households, the average credit card debt is $7,274.
Anyway, according to the Fed survey, the U.S. household consumer debt profile is
- Average credit card debt: $15,593
- Average mortgage debt: $153,184
- Average student loan debt: $32,511
In total, American consumers are $11.62 trillion in debt (an increase of 3.4% from last year). This breaks down to,
- $880.3 billion in credit card debt
- $8.05 trillion in mortgages
- $1.12 trillion in student loans (an increase of 10.5% from last year)
I agree with the Grinch sentiment: if you are already in debt, please do not dig yourself into deeper debt to buy presents over the holiday season. You will have an extremely difficult time reaching your financial goals if you add more debt during the holiday season.
To help everyone in our extended family with their Christmas budgets, and to keep from going crazy, we made an agreement with everyone to not buy any Christmas presents for any other adults in the family. This does not apply to kids, spouses, or significant others, although even this spending should be kept within debt-free budgets.
Do you have a gift-giving budget for the holidays? Have you ever gotten caught up in the holiday sale frenzy and ended up spending over budget?