Consumers spent a record $9.12 billion on online purchases during Black Friday and another record $11.3 billion on Cyber Monday, according to the latest data from Adobe. So far in November, consumers have spent a total of $107.7 billion online, up nearly 10% from a year ago.
Yet almost 60% of Americans were living paycheck to paycheck before the month.
“Buyers continue to spend despite inflation and headwinds in the economy,” said Tom McGee, president and CEO of ICSC, the commercial real estate industry’s largest trade association.
As high prices continue to weigh on the financial situation of most households, more and more shoppers are relying heavily on credit cards and flexible payment plans to make their purchases.
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But with annual percentages close to 20%, or even 30% off select retail cardscredit card debt can take years to pay off.
While buy now, pay later often promises zero interest, studies also showed that installment buying could induce consumers to spend more than they could afford.
Last year, more than half of shoppers made a purchase with buy now, pay later they couldn’t payaccording to a survey by Oxygen, an online-only bank.
This year, Americans are on course to fall even more in debt. However, experts say it’s not too late to avoid the same financial pitfalls this season. Here’s how.
How to avoid going into debt while on vacation
Black Friday shoppers wait to enter the Nike store at the Opry Mills mall in Nashville, Tennessee on November 25, 2022.
Herald Seth | AFP | Getty Images
1. Cut up your credit card
If your credit card balance already seems unmanageable, “it’s time to cut it and focus on paying it off,” said Lori Gross, financial advisor at Outlook Financial Center in Troy, Ohio.
“Use cash from now on if you still need to shop during the holiday season.”
2. Develop a strategy
Add up what you’ve bought so far and budget for the rest of the season, Gross said. “It should be significantly lower if you’ve already spent too much.”
Share your strategy with a family member or friend so they can help you stay on track with your new budget and avoid further debt, she suggested. There are also free online apps and resources that can help you organize your finances for the holiday season.
3. Create a vacation fund
It’s not too late to start a vacation fund. “Strategy now and hold yourself accountable,” said Michael Sheppard, group vice president at Minneapolis-based financial services firm Thrivent.
Challenge yourself to save money each week, he advised. “Making routine transfers from spending accounts to a vacation savings account for future purchases can really add up.”
4. Communicate with family and friends
If you want to scale down your celebrations, start those conversations with loved ones now, Sheppard advised. “Instead of exchanging gifts, maybe there’s a holiday event, concert, or theater performance your family can attend together,” he said. “Make the shared experience an economical memory.”
Also consider a Charitable donation instead of gifts. Taking the time to volunteer can be especially meaningful, Sheppard said.
“It can help you stay grounded in what matters and clarify what you want to accomplish this holiday season.”