Attorney at Debt Advisors Law Offices
Practice Areas: Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Stop Foreclosure
The holiday season is a time of joy, family gatherings, and celebrations. But along with the cheer often comes financial stress. Between shopping for gifts, hosting parties, and traveling, it’s easy to spend more than you planned.
For many households, this creates a cycle of holiday spending debt that carries into the new year. Understanding the risks of overspending and learning how to manage expenses can help prevent long-term financial struggles.
Every year, consumer spending spikes during the holiday season. From Halloween through New Year’s, households across the country spend billions on gifts, food, decorations, travel, and entertainment. In recent years, the rise of online shopping, especially on Black Friday and Cyber Monday, has made it even easier for shoppers to spend impulsively.
Reports show that the average American household spends over $1,000 during the holidays, and much of this spending is done on credit cards. While convenient, this reliance on credit can quickly snowball into post-holiday debt.
Even small purchases, an extra gift, a dinner out, or event tickets add up when multiplied over several weeks of celebrations.
“The average American plans to spend more than $1,000 during the holiday season, with nearly one-third relying on credit cards.” – Statista/NRF Data
When you factor in travel costs, hosting holiday parties, and attending seasonal events, it’s not surprising that many families face financial stress once the festivities end.
Spending more than your budget allows might feel manageable at first, but the consequences often linger well into the following year. Credit card debt is one of the most common issues after the holidays, and interest rates above 20% mean balances can grow quickly if left unpaid.
“Credit card interest rates currently average above 20% APR, meaning holiday balances can quickly snowball if left unpaid.” – Federal Reserve
For those already struggling with debt, holiday overspending can make repayment even more difficult. Purchases that feel small in the moment like meals, decorations, or concert tickets can become expensive once interest is added.
It’s also important to understand the legal implications of debt. Under U.S. Bankruptcy Code §523(a)(2)(C), debts incurred within 90 days of filing for bankruptcy on “luxury goods or services” may be considered non-dischargeable. In other words, large holiday purchases made on credit could remain even if someone eventually files for bankruptcy.
“Debts incurred within 90 days before a bankruptcy filing for ‘luxury goods or services’ may be considered non-dischargeable under U.S. Bankruptcy Code §523(a)(2)(C).”
The best way to avoid holiday debt is through careful planning. Setting a budget before the season begins helps you understand what you can realistically afford. Try to use cash or debit cards instead of relying solely on credit.
When shopping, make a list and stick to it. Impulse buying is a major reason spending exceeds expectations. Online shopping makes this even easier, with one-click purchases tempting consumers to overspend. Tracking your spending regularly can prevent surprises at the end of the month.
Look for alternatives to traditional gift-giving. Homemade presents, shared family experiences, or group activities can be just as meaningful without the hefty price tag. Hosting potluck dinners instead of covering all the expenses yourself can also cut costs.
Finally, think ahead to next year. Setting aside a small amount each month into a holiday savings fund can help reduce stress when the season comes around again.
Sometimes, despite your best efforts, debt begins to feel overwhelming. Warning signs include missing minimum payments, relying on multiple credit cards, or borrowing to cover everyday expenses. These patterns suggest that debt may be outpacing income.
The emotional toll of financial stress should not be ignored. Constant worry about bills, collections, or falling behind can affect both mental health and family life. If you recognize these patterns, it may be time to seek professional guidance on managing debt responsibly.
While holiday overspending is common, it’s important to understand how it fits into the bigger picture of debt management. Not all debts are treated the same, and recent “luxury” purchases may not be dischargeable in a bankruptcy case. That means timing and type of spending can matter significantly.
In Wisconsin and under federal law, consumers also have protections through agencies like the Consumer Financial Protection Bureau. These protections limit abusive collection practices and ensure consumers are informed of their rights.
However, the responsibility for managing debt begins with careful spending choices and realistic planning.
| Expense Category | Average Cost per Household |
Notes |
| Gifts | $1,000 | Often financed with credit cards |
| Travel | $400–$500 | Includes flights and road trips |
| Holiday Meals/Parties | $500 | Food, drinks, hosting expenses |
| Entertainment | $200–$300 | Movies, events, activities |
| Miscellaneous | $200 | Decorations, impulse buys |
These numbers highlight how quickly costs accumulate. Even if each category seems manageable, the combined total often exceeds what families can comfortably pay off.
Sales promotions, gift-giving traditions, and social pressure encourage impulse buying that exceeds planned budgets.
Interest charges increase the balance, making it harder to pay down and more expensive long-term.
Luxury purchases within 90 days of filing may be considered non-dischargeable under bankruptcy law.
Plan a budget, use cash when possible, and track spending carefully to stay within limits.
Missed payments, maxed-out cards, or borrowing for daily needs are key warning signs.
Consider financial counseling, explore debt management options, and review spending habits to prevent recurring issues.
The holidays should be a season of celebration, not financial regret. Yet for many families, holiday spending debt creates long-term challenges. By setting realistic budgets, monitoring credit use, and understanding the risks of overspending, consumers can enjoy the season without sacrificing financial health.
If debt after the holidays feels unmanageable, professional guidance can make a difference. Our Wisconsin bankruptcy attorneys understand the challenges families face during and after the holiday season. Schedule a free consultation today to discuss your options and take steps toward a stronger financial future.
Learn about bankruptcy protections, types of bankruptcy, how to get started, what to expect, and who to trust. Filing bankruptcy is the ONLY way to completely eliminate debt. If bankruptcy is right for you, it offers powerful protections that cannot be achieved through alternative solutions such as hardship relief, loans, or debt settlement.
