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Debt has become one of those things that people dread about the holidays, along with travel nightmares and awkward family conversations.

Inflation and the rising costs of presents have put a damper on many people’s year-end celebrations, and many are opting out of gift-giving altogether this year.

Bad news for the kids and their seven cousins, but after a year of financial madness, hardly anyone has money for Nerf guns and Lego. Fortunately, or unfortunately, our Christmas misery is shared by most of the world.

US-based LendingTree recently conducted a survey that showed nearly 47% of Americans have gone into debt due to holiday spending on gifts. Interestingly enough, 40% of those surveyed admitted that they would rather trade their own gift for money if they could, which is another indication of how brittle most people’s bank accounts are these days.

Although the numbers coming out of the US might resonate, we may in fact be a little better off than we might think.

According to BrandMapp’s Director of Storytelling, Brandon de Kock, all this doesn’t necessarily mean that most of the country’s formally employed income earners are feeling pessimistic over their finances.

While the percentage of people saying they have no debts at all, or are not at all worried, has shrunk from 60% to 51% in the past four years, with the biggest jump coming in 2023, the story isn’t all bleak.

“When you look at the BrandMapp audience, fewer than 30% are actually ‘debt-stressed’, and that number drops to just 13% for households earning R1 million or more a year. More importantly, a massive 51% of all consumer-class adults are either debt-free or not at all concerned about their debt.”

Gen Z and Boomers stand out as the least debt-stressed, with about 45% having no debt at all, while 35-55-year-olds bear the brunt of debt stress, with 35% in this cohort feeling burdened by its weight.

De Kock comments, “The reality is that more highly educated, employed adults know how to deal with debt and use it as a tool to achieve their preferred lifestyle rather than a necessity. Yes, there are certainly new-to-category consumers borrowing themselves into a lifestyle, but the data indicates that it’s a minority, not the majority.”

While price hikes have eased somewhat in recent weeks, many have noticed that what goes up, doesn’t always come down. Even when gifts are taken out of the equation, the cost of enjoying a well-deserved holiday with the family can easily leave families in a pinch come January.

Elizabeth Ayoola, a personal finance expert at NerdWallet, reckons there is no shame in getting ahead of the debt trap and telling your family to not expect the same amount of gifts as in previous years.

“If you’re struggling financially and need to dial back the gift-giving this holiday season, tell people. Most of your loved ones don’t want you to go into debt for a holiday party or gift, so they’ll understand.”

“It’s important to remember that you are not a failure because you cannot afford to buy expensive gifts.”

The same survey has found that 63% of people who went into debt for the holidays said they regretted it, so instead of maxing out the credit card at Toys R Us, here are some tips on how to make the Randellas stretch a bit further this holidays:

• Set a budget (and expectations) – Look at what you spent last year and set a spending limit based on your current situation. Then, be clear with your loved ones.
• Avoid “spaving” this holiday season – Be careful of deals that require you to spend more to save more. Is free shipping worth it if you have to spend more?
• Consider paying with cash – It’s never been easier to spend money but research shows it hurts more to pay with cash. That pain can push you to spend less.
• Take a break from social media – Targeted ads can wear you down and cause you to buy things you don’t need. Consider logging off Instagram and Facebook for a while to avoid the temptation.
• Create shopping hurdles – Make it harder to spend money. Remove credit card details from your web browser to add an extra obstacle and cut back on impulse spending.

While spending extra is inevitable during the holidays, try to avoid the allure of “We’ll deal with it in January”. Before you know it the braais will be over, the Christmas crackers will have been popped, and your nephew will have forgotten about his new battery-powered Nerf gun.

While ’tis the season to be spending, we’ve got to thank our partners at Galbraith & Rushby for taking care of our financial well-being the last year. Their team of financial experts offer professional advisory services to both individuals and businesses, from tax compliance to estate planning.

Thanks to Galbraith & Rushby, 2025 looks like a year of possibilities, instead of uncertainties.

[source:newsnationnow]