22 March 2018
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Personal Finance
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Days are getting longer. Kids are counting down the days until spring break. The snow on the ground might even be starting to melt. The frenzy and excitement of the holidays are a distant memory, but one bitter reminder remains: the debt that’s still lingering months after holiday shopping is done.

Holidays Are Expensive

However you look at it, the holiday season is an expensive time for many people. The costs of gifts, social events, and travel add up quickly, especially for families with kids. Exactly how much of a financial toll do the holidays take on the people of St. Louis? We were interested in finding out, so we conducted our own holiday debt study that surveyed 125 St. Louis residents. The results follow.

What Percent of St. Louis Individuals Purchased Gifts Over The Holidays?

people who purchased gits for loved onesFor many people, the holidays are about giving. It’s a joy to discover the perfect gift for a loved one, or to see the kids’ faces light up when they open their presents. The statistics agree that buying gifts is a major element of holiday spending. According to the survey, 87% of St. Louis respondents purchased gifts for loved ones last year; among families with two or three children, 100% of respondents purchased gifts.

What Percent of St. Louis Individuals Spent Money On Holiday Travel?

people who spent money on holiday travelAirfare, hotels, rental cars, gas, tolls, parking, taxis, and overpriced food can eat up the biggest of travel budgets very quickly. For some, however, traveling during the holidays is unavoidable. 13% of St. Louis respondents opened up their wallets for holiday travel expenses.

What Percent of St. Louis Individuals Spent Money On Holiday Parties?

people who spent money on holiday partiesThe costs involved with having a social life really add up, whether it’s party favors, decorations, hostess gifts, or even the ingredients to make a dish for a potluck. Of survey respondents, 18% spent hard-earned money on holiday parties and get-togethers.

Holiday Debt is a Serious Problem

How is St. Louis paying for all these additional expenses? Unfortunately, the answer is credit—and many survey respondents spent well beyond their means, accumulating a substantial amount of debt over the holidays.

What Percent of St. Louis Individuals Finance Holiday Purchases Using Credit?

people who purchase holiday gifts with creditWhen you feel an obligation to purchase gifts, attend holiday parties, and travel to visit family members, it’s a difficult choice to go without—even if the spending is over your budget. Over half of St. Louis residents financed their holiday purchases in some way, either by credit cards (40%), store cards (12%), personal loans (4%), home equity loans (.8%), or even payday loans (4%).

How Much Did St. Louis Residents Overspend Over The Holidays?

people who overspent on holiday shoppingWhen you have the cash on hand to pay off credit debt quickly, taking on the debt isn’t a major issue in itself. The problem arises when people fail to establish realistic budgets, or when unexpected circumstances provoke people to spend more than they can afford. The majority of respondents in our study overspent their budgets by two times—or more.

What Percent of St. Louis Individuals Accumulated Debt Over The Holidays?

people who accumulated debt over the holidaysFor people who don’t have much in savings, overspending most likely means debt. The study found that 34.4% of St. Louis residents accumulated debt this past holiday season. That’s a tough way to kick off the new year, especially when the debt is considerable and carries a high interest rate.

How Much Debt Did St. Louis Residents Accumulate Over The Holidays?

how much debt people accumulate over the holidays

Some St. Louis individuals amassed a staggering amount of debt with holiday spending. How much, exactly? Categorizing debt into tiers of $1,000, here’s how it breaks down:

  • $999 or less (41.9%)
  • $1,000 to $1,999 (37.2%)
  • $2,000 to $2,999 (4.7%)
  • $3,000 to $3,999 (7%)
  • $4,000 to $4,999 (0%)
  • $6,000 or more (7%)

 

How Much Interest Are St. Louis Residents Paying On Holiday Debt?

people who pay more than 10 percent interest ratesMore than half of survey respondents are paying substantial (10% or higher) interest rates on their debt. Although interest rates 9% or less comprised the majority (39.5%), interest rates of 10-19% (37.2%) and 20-29% (23%) were not far behind. If a person paid $100 a month on a $1,000 debt with a 20% interest rate, it would take 11 months to pay off the debt; not only would they be paying an extra hundred dollars in interest, but they’d also still be paying for the previous year’s spending by the time the next holiday season rolled around.

How Long Will it Take St. Louis Residents to Pay Off Holiday Debt?

when people will pay off holiday debtSt. Louis individuals who accumulated debt this past holiday season will continue to pay for their purchases for months after the holidays have passed. Among respondents, 4.7% anticipate being debt-free in 1 month, 11.6% expect to pay off their debt in 2 months, 23.3% will be paying interest for 3 months, 14% for 4 months, and a staggering 46.5% will be paying for holiday purchases for 5 months or longer.

Your Holiday Savings Plan

The holidays are stressful enough on their own, but far more stressful when we’re digging ourselves into debt in the name of good cheer. How can we break the cycle this year? The answer is to start saving now.

First, create a holiday spending budget. Include gifts, party favors and hostess gifts, and travel expenses. Don’t forget about postage, shipping, wrapping paper, cards, and even that white elephant exchange at work. It all adds up!

Second, open a holiday spending savings account and schedule automatic deposits. If you normally spend $1,000 on holiday purchases and there are six months until Christmas, deposit $167 each month. You’ll earn a little interest on your money, and you’ll have the cash you need for the holiday season.

Third, make your list, and stick to it.

Fourth, plan ahead. Desperate last-minute shoppers forego the best deals, and the pressure of finding an appropriate gift when the clock is ticking leads to overspending. When you start holiday shopping early, it’s easier to make smart choices with your money.

Create a holiday spending budget

Speak With An Experienced Bankruptcy Attorney

If you feel overwhelmed by your holiday debt, you may be considering filing for bankruptcy. When you schedule a consultation with A Bankruptcy Law Firm, a knowledgeable and experienced bankruptcy attorney and accountant will review your financial situation and help you understand your options. Bankruptcy may be the fresh start you need to take your first step toward financial freedom.

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