money Financial expert Chris Hogan: 'What we have is an epidemic'
More holiday spending this year and leftover balances from last Christmas season are creating a vicious cycle of debt, according to one financial expert.
"What we have is an epidemic and I think it's really easy for us to get caught up in the holiday season,” financial expert and motivational speaker Chris Hogan said recently on Yahoo Finance. “That can cause us to lose sight of our long-term goals."
The average American is expected to spend $1,047 this holiday season, a 4% increase from last year and a 25% rise in the last decade, according to the National Retail Federation. At the same time, 48 million Americans are still paying off purchases from Christmas last year, according to a NerdWallet survey.
Holiday debt cycle
Americans allow the joy and giving of the holiday season to derail them from their other financial goals, such as socking away money for retirement, saving up a down payment for a home purchase, or paying off student loans.
But “falling into debt is not going to help you,” Hogan said. If history is any guide, though, many shoppers probably will.
Those who went into credit card debt for the 2018 holiday season carried $745 on average in outstanding balances, according to a new survey from Crediful, a personal finance website. Only 2 in 5 managed to repay that debt within three months, making their holiday purchases even more expensive because of accrued interest.
More shoppers are also turning to holiday loans to fund their spending. Twice as many people have or plan to take out a holiday loan this year versus last, according to Experian.
Those behaviors worry Hogan.
“It’s time for the cycle to end,” Hogan said. “Look at where you are financially and be real about what you can spend and stick to it.”
Denitsa is a writer for Yahoo Finance. Follow her on Twitter @denitsa_tsekova.
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