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Using debt for holiday shopping | Paying for Christmas and Thanksgiving with debt

It is a horrible idea to use credit cards (if they are not immediately paid off within days), loans, or other types of borrowing to pay for the holidays. Never go into debt over the long holiday season. Do not borrow money to pay for travel, Christmas gifts for your family (or yourself!), food, meals, or any of the other countless things that people spend their money on over the holidays.

There are multiple studies that come out each year that show the average shopper goes into more than $1000 of debt during the holiday season. Companies such as Visa, MagnifyMoney, and other organizations report on this data. Also, roughly 10% of shoppers go into over $5000 debt during the Thanksgiving and Christmas holiday season.

Never borrow money to pay for the holidays

Most Americans have no emergency savings and/or very little if any retirement funds. And they complain about the fact they can’t get ahead, but then they go and borrow money to pay for toys, gifts, clothes, meals out, or other material goods during the holidays. It makes no sense. Only pay in cash for holiday goods or services.

If you borrow money, say $1000, and pay it back monthly with the minimum payment, it will take 4 to 6 years to pay that debt off. Not only that, you will end up paying about $1500 in total for that $1000 your originally borrowed. That means you are paying $500 in interest costs to pay for those Christmas gifts and holiday items. Think what that money could have grown into if invested, or that money could have started or increased an emergency savings account.

What makes this entire situation worse, is that if someone goes into debt $1000 per year, for say 5 holidays in a row, it will take them 10 years or so to pay off the debt and cost them $2500 to $3000 in interest. As the data from companies such as MagnifyMoney show that when someone goes into debt for one holiday or Christmas season, they often repeat the cycle for multiple years. It therefore builds a cycle of debt for the family that takes them years to pay off.

What to do instead of going into debt over the holidays

There are countless things to do. First, stop making the holidays (and probably your life) about materialism. It is not correlated to happiness. If you have kids, then have discussions with your kids about it as well.

If you have kids and can’t afford Christmas toys as you are struggling, and do not want to go into debt to buy “stuff”, first of all congratulate yourself. As that is a great decision. Then go look into the countless charities, churches, and organizations that offer holiday help such as the Salvation Army, Toys for Tots, and countless others. The fact is that charities often focus on helping the less fortunate during the holidays.

There are many free experiences and things to do on Christmas instead of spending money or going into debt. Christmas Carols, playing a game as a family, doing outdoor activities, parks, etc. Even volunteer. Make small at home gifts for minimal money. Or whatever. The point being is there are many free things to do each year to get into the Thanksgiving and Christmas spirit, and all are better than going into debt. Find free Christmas activities for a family.

Heck, even if you can afford the holidays, most of those activities are better for you and your kids mental health. After all, study after study shows that giving back to someone brings much more happiness that receiving from others. After all, spending money on yourself does not lead to happiness.

Of course, you can also plan or budget for the holidays too. You can say save $10 per week for an entire year so you have $520 for the next Christmas. Then use that saved cash for shopping instead of credit card debt or other loans. Or save as well as shop for deals throughout the year. As there can be great sales during January, and you can always but stuff then for the next Christmas season (several months away), and that can be better than going into debt.

The point of all of this is do not go into debt for the holidays. Use cash or debit cards when shopping. Do not borrow money. There are many other ways to experience holiday joy vs. spending money you do not have. What other ideas to you have or do you and your family do other than going into Christmas or Thanksgiving debt?


Jon McNamara is the CEO of needhelppayingbills.com, a company that he started in 2008 and that specializes in helping low income families as well as those who are in a financial hardship. He also found NHPB LLC, a company committed to helping the less fortunate. Jon and his team also provide free financial advice to help people learn about as well as manage their money. Every piece of content on this website has been reviewed by him before publishing and many of the articles he has personally written. Jon is the leading author for needhelppayingbils.

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