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The most wonderful time of the year often comes with a hefty price tag — and many people expect to be paying for it into next summer.
People's debt balloons "because they don't plan for Christmas, like it sneaks up on them, like they move it or something," personal finance guru Dave Ramsey told "Fox & Friends" last week.
Ramsey's comments were in response to a survey showing that the average American will spend over $2,000 on holiday-related expenses this season, including travel, gifts, food, and clothes.
The survey of 2,000 people was conducted in early November by Talker Research and commissioned by Achieve. A fifth of respondents said they likely wouldn't recover financially until May 2025 or later.
The personal finance guru and host of "The Ramsey Show" described the $2,000 figure as "mindblowing," adding that it was a large sum to spend "all in the name of happiness comes from stuff — and it doesn't."
People can stay out of money trouble by socking away funds each month in preparation for the winter splurge, Ramsey said. They can also avoid overspending by drawing up a budget for gifts and other costs and sticking to it, he added.
"The problem with Christmas is not that we enjoy buying gifts for someone else — that's a wonderful thing," the radio personality said.
"The problem is we impulse our butts off, and we double up what we spend," he continued, pointing the finger at retailers who are "great at putting stuff in front of us that we hadn't planned to buy."
The typical US adult expects to spend $1,012 on gifts alone this holiday season, up from an estimated $975 last year, according to a Gallup survey of at least 1,000 people conducted in November.
Household budgets could be squeezed this holiday season. Inflation surged to a 40-year high of over 9% in the summer of 2022 as the cost of food, fuel, housing, and other essentials jumped, and remained above the Federal Reserve's target rate of 2% in November.
The central bank rushed to curb price growth by hiking interest rates from nearly zero to north of 5% within 18 months, sending people's monthly payments for their credit cards, car loans, and other debts skyward. Fed officials have cut rates to roughly 4% since September, but recently indicated they only expect to make two further cuts next year.
The upshot is Americans are likely to face a combination of elevated inflation and steeper rates for a while yet, setting the stage for a costly Christmas.
