The holiday season comes with a lot of pressure. People want to wow their children or impress their spouses. They spend hours recreating a family recipe to uphold tradition or planning a family trip.
Researchers have found that approximately a third of all adults in the United States take on significant debt during the holiday season. For some people, that debt may push them over the financial edge and leave them unable to balance their budgets. Others may spend a significant portion of the new year paying off their spending toward the end of the year.
Why do the holidays so often lead to major debts?
The pressure to wow with presents
Gift-giving is a fun and enjoyable holiday tradition. It is also unfortunately the source of much holiday-related debt. People frequently buy more than they can afford in the hopes of wowing the recipients of their presence. They may then have substantial amounts of debt to repay after the holidays. Even with Black Friday sales, the pressure to give high-quality gifts to multiple people can strain household budgets.
The cost of travel
Many holiday traditions involve traveling to spend time with family members. Whether people load into the family van and drive across two states or hop on a plane, they may spend hundreds or even thousands of dollars traveling during the holiday season. If they need accommodations other than a family member’s house, their seasonal travels can easily become quite costly. Airlines and hotels tend to charge premium rates around the holidays because so many people travel. Those increased costs can lead to substantial debt for those who want to spend the holidays with their loved ones.
Extended breaks from work
Some people have paid leave offered by their employers that can ensure their income remains consistent even when they take a vacation. Many others do not have paid leave. They may be able to arrange to take time off from work, but their income slumps as a result. Combining a drop in household income with a surge in costs is a dangerous formula. In some cases, people may eventually come to realize that the debts they accrued during the holiday season might make bankruptcy necessary.
Discharging eligible unsecured debts in a personal bankruptcy filing can help people overcome temporary financial hardship. Those who understand how the holidays create financial pressure can either avoid common pitfalls or learn from their mistakes and take the right steps to protect themselves.
