Don’t let poor financial decisions ruin holidays with debt

KARI SHEA | UNSPLASH

Rethinking what leads to holiday spending is a first step to limiting debt, says Jacqueline Howard, head of money wellness at Ally Bank.

Don’t go into debt trying to buy family and friends a perfect holiday.

A recent survey by Ally Bank indicated that 52% of consumers planned on taking on some kind of debt during the holidays. 71% of those will need three months or more to recover from the debt accumulated.

Jacqueline (Jack) Howard, head of money wellness at Ally Bank helps people reshape the way they think about holiday spending.

“I look at money a little differently,” she said. “I look at the beliefs you have around money, your values around money and how it shows up in your skills so that you can potentially build wealth.”

Howard is focused on promoting financial well-being and knowledgeable about how a person’s upbringing can influence financial decisions. With that, the goal is to break bad habits that lead to debt.

“A lot of times people get away from the core values during the holiday season,” she said. “They think that people want more and more gifts and things like that when in reality from a wellness perspective, the things that actually spark joy and wellness for you, it’s not gifts. It is actually experiences.”

Ally estimates the average person will spend $1,400 on gifts during the holidays. If it isn’t in your budget, don’t spend it.

“It isn’t going to bring you joy,” Howard said. “It is going to decrease it because you are overspending and now have this added stress, potentially debt in the future.”

Howard encourages people to get to the root of what makes the holidays special. She challenges them to look at the “why” of spending and root of the urge.

“Get back to the basics of what are the real experiences,” she said. “Is it sledding? Is it going outside to go for a hike? Is it Christmas caroling? All of these are activities that I guarantee your children will remember much longer than the gift that you gave them.”

One of Howard’s goals Ally is helping Brown and black communities and equipping them with the tools they need for financial well-being and growth.

“I think specifically for the Black community is getting back to that joy,” Howard said. “The joy of spending time with family, the joy of whatever your faith is. Get back to what the holiday season is supposed to be about.”
Here are tips from Howard to use when you spend during the holidays:

1. Take a breath
“We want to be mindful about the decisions we’re making and what we are spending,” she said.

The goal here is to be intentional about what you are buying. Don’t buy on a whim. Buy things that have meaning; it doesn’t necessarily have to be a gift with a high price tag. Take a step back and figure out what is important to whom you are buying for.

2. Know your budget
“I am a big fan of conscious spending,” Howard said. “Your financial goals shouldn’t go away just because it’s Christmas.”

Howard encourages people to write down their financial goals. It helps lay out a budget in front of you to physically see. This way you won’t have buyer’s remorse after you spend more than what you have available.

3. What are your beliefs around holiday spending?

Often, people’s holiday image is ingrained from childhood. If your parents bought tons of gifts, then it is natural to think you must do the same thing. Howard wants to break this cycle.

“A lot of these habits you learn from your family or society,” she said. “Something I did as a check-in this year was look at what my first memory of the holiday was. So, think about that for yourself. What are your first memories of the holiday season?”

If you’ve already accumulated debt, don’t beat yourself up

After the holidays is the worst time to get down on yourself for spending. So, you’ve spent what you’ve spent. Now is time for a game plan to pay down debt quickly.

“I’m a big fan of looking forward with our spending,” Howard said. “When we think of a cautious spending plan, that is the idea of going and spending money on things that you love and being really frugal with things you don’t.”
Howard emphasized to not get down on yourself.

“Take a pause after the holidays,” she said. “It’s behind us, we don’t want to have any shame about it. We made some mistakes, but that is OK. We’ll go into the new year, and we’ll have a completely new attitude about money and how it is used to create joy, not stress.”

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