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Survey: 75% Who Live Paycheck to Paycheck Worry About Holiday Expenses | Credit Cards
A late October survey from U.S. News & World Report showed that more than seven in 10 respondents who live paycheck to paycheck are worried about affording the holidays this year. The survey revealed that a majority – 52.5% of respondents – say they’re living paycheck to paycheck.
- Almost 18% say they’re still paying off credit card debt from last year’s holiday season.
- About one in five plan to pay for holiday expenses by carrying a balance on a credit card.
- When asked where they’re feeling high prices the most, 50.3% cite groceries and 21.5% say gas.
- Many are shopping early this year: 38.7% say they’ve started holiday shopping, 28.9% are starting in early November and 16.4% waiting until Black Friday.
How Much Are Americans Spending on the Holidays This Year?
Almost 33% of respondents plan to spend $500 or less on shopping this year. In last year’s U.S. News holiday spending survey, nearly 41% planned to keep costs under $500. The rate of inflation has eased, but prices are still high, suggesting that it might be more difficult to spend less this year.
- $500 or less: 32.6%.
- $501 to $600: 18.2%.
- $601 to $700: 9.5%.
- $701 to $800: 8.2%.
- $801 to $900: 4.6%.
- $901 to $999: 11.7%.
- $1,000 or more: 15.3%.
(Nate Hellman)
Holiday Spending Strategies
Respondents were given a list of payment strategies and asked to select all the options they plan to use. Here are the findings:
- Saved money and can afford it: 52.5%.
- Cut back significantly on holiday expenses: 21.4%.
- Cut back in other areas to cover holiday expenses: 30.5%.
- Put expenses on credit card and carry a balance: 19.7%.
- Use buy now, pay later plan to delay cost: 13.1%.
- Open credit card with a 0% purchase APR: 4.6%.
- Borrow money another way: 2.8%.
While it’s terrific that a slim majority have saved money for the holidays, it’s troubling that so many plan to use credit to get through the holidays. Nearly 20% plan to carry a balance on a credit card, and just over 13% will use buy now, pay later financing.
(Nate Hellman)
3 Ways to Survive Holiday Expenses
The problem with using credit as a holiday survival strategy, especially credit cards, is that it can lead to insurmountable debt. For those living paycheck to paycheck, increasing your debt load can lead to financial disaster.
This approach creates more debt that has to be paid off in 2024. A better way to go? Choose strategies to survive this year’s holiday expenses while adding minimal, if any, debt.
Make a Holiday Budget You Can Live With
This strategy is going to take a bit of acceptance on your part. Actually, on your family’s part, too. Even though you can’t have an extravagant holiday party or jet off to Fiji, that doesn’t mean you can’t still have fun and experience joy.
This is the year to create “experience gifts” rather than dropping tons of money on gift cards. Tap into a creative skill, such as making banana bread, knitting mittens or hosting a potluck dinner for the extended family. Another option is to buy a friend lunch and give an hour of your time. If things are really tight, you can even plan these lunches for January and February of next year to spread out costs.
A good way to stick to your list? Use Santa’s Bag, a gift-tracking app. With this app, you can track your list, see what you’ve bought and stay on budget.
Use Credit Cards the Smart Way
Respondents were asked to identify all the ways they planned to save money by using credit card rewards. Here are the findings:
- Using cash back rewards on gifts or travel: 35.4%.
- Using airline miles for holiday travel: 15.2%.
- Using hotel points for holiday travel: 15.0%.
- Redeeming rewards points for gifts or travel: 32.2%.
- Not redeeming rewards: 24.2%.
- Don’t have a rewards credit card: 9.5%.
(Nate Hellman)
If you have credit card debt, step away from your credit cards. Don’t add to your debt. But if debt isn’t a problem, check out these tips for using credit cards strategically to pay for the holidays.
- Redeem rewards: In the survey, 35.4% of respondents say they’ll use cash back rewards to help pay for gifts and travel. Many others plan to use miles and rewards points to decrease costs. Starting in January, use your credit cards strategically so you have a bundle of rewards by December.
- Sign-up bonuses: If you open a new rewards card, use the card for holiday expenses. These bonuses are quite generous, and you can use them as a statement credit in January to help cover your credit card balance.
- Get an interest-free loan: With a 0% purchase APR rewards credit card, you can use it to cover the holidays and pay it off – without interest – for more than a year. You’ll also earn rewards and maybe even a sign-up bonus!
Create a Treasure Map of Savings
OK, this takes some time, but your goal is getting through the holidays without getting into worse financial shape. It’s worth the effort.
You’ll save the most by employing a variety of saving strategies. Make a list and keep it with you so you don’t forget which days and apps to take advantage of. Think of this as your own treasure map to a whole lot of savings.
- National Free Shipping Day: If you shop a lot online, remember Dec. 14, 2023. Plan your shopping accordingly.
- Don’t wait until Black Friday: Look for sales online starting right now. You can track prices on Amazon with Camelcamelcamel, via an app or a browser extension. There are many others, but I like this one. Honey is another browser extension, but it compares prices from places other than Amazon.
- Extreme couponing: You’ve tackled price tracking, so couponing is next. SlickDeals is a good place for couponing as well as comparing and watching prices. RetailMeNot is another popular place for coupons and also getting cash back on purchases.
- Rakuten: I use this browser extension myself, and I earn cash back (in addition to credit card rewards) with online purchases. Savings can range from 1% to as much as 20% or more. I get a check for about $35 to $40 every three months. I don’t do impulse buying, though, and that’s key. Stick to your list!
I know all this is time-consuming, but try to think of it as an adventure. And pat yourself on the back. You’re taking charge of your finances and refusing to waste money you don’t have.
