A 2014 report on holiday shopping plans and finances found that about 55% of the respondents reported that money was their main source of stress during the holiday season. Despite this, more than half of those people planned to use their credit cards for holiday shopping, and they plan to spend about as much money as they did the previous year.
Take the current number of children in the US that are asking for the newest tablet or tech gadget and multiply that by $500.00. Then add tax and shipping costs. Thank goodness for elves and reindeer because without them, Santa would be a repeat client of Krekeler Law as a result of gifting that much. On a similar note, what do the rest of us do? American Research Group, Inc. estimates that the average American family spends $861 on holiday gifts per year.
Let’s round that up to $1000 to include food contributions and travel (gas). How many of us have $1000 in cash lying around? Most Americans do not budget for holiday spending. So what do we do when we are not Santa? We put it on a credit card. Now that $1000 can be paid off over time with the ease of small monthly payments. Good news, right? The Holidays just got even merrier!
Unless you do the math.
If I pay the minimum amount monthly on my $1000 Holiday, I will still be paying 143 months from now and I will have paid $1,694.86. (Calculated with an APR of 25.99% and paying 3% monthly).
Credit Card companies could at least send a greeting card for the $694.86 gift that they get from the average consumer.
Don’t you wish you could afford to cover your Holiday spending in cash?
Our Tips for reducing this holiday stress: