Suze Orman says beware of the 'overspending danger zone' as the average American plans to spend $1,652 on holiday shopping, surpassing pre-pandemic levels — here’s how to dodge festive debt

Serah Louis
Suze Orman says beware of the 'overspending danger zone' as the average American plans to spend $1,652 on holiday shopping, surpassing pre-pandemic levels — here’s how to dodge festive debt
Suze Orman says beware of the 'overspending danger zone' as the average American plans to spend $1,652 on holiday shopping, surpassing pre-pandemic levels — here’s how to dodge festive debt

Inflation doesn’t seem to be casting as much of a “bah, humbug!” pall this holiday season, with Americans seemingly bouncing back to splurge on gifts with renewed festive glee.

In fact, shoppers plan on spending an average $1,652 this season, a 14% jump from last year — and surpassing pre-pandemic levels for the first time — according to a recent report from Deloitte.

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“Although inflation shows signs of moderating, consumers have come to expect higher prices and are adjusting their holiday spending accordingly,” says Nick Handrinos, vice chairman and leader of retail and consumer products at Deloitte, according to a press release.

“We expect to see shoppers make their lists and check them twice for deals, but a return to pre-pandemic spending levels shows promise for the season overall.”

But financial icon Suze Orman warns it can be easy for people to take things too far.

“Right now is when you can talk yourself into not overspending on holiday gifts and travel,” she recently wrote in her blog.

Here’s what she says you can do to avoid financial fallout from your festive plans this year.

Shoppers are spending more

There are a few factors contributing to the projected rise in spending this holiday season.

High prices across the board mean that shoppers will likely need to shell out more for these things. But shoppers may now finally be able to weather these higher prices a little better than they used to.

A still-strong job market is continuing to bump up salaries — with wages climbing 4.2% from last year, according to the most recent data from the Bureau of Labor Statistics. This growth currently outpaces inflation, with inflation-adjusted average hourly wages rising 0.5% in September from a year earlier, according to the Labor Department.

“Despite what seems like a constant drumbeat of negative news — rising interest rates, persistently high inflation and more — consumers remain resilient and their positive outlook for this year's holiday shopping season is a testament to the continued strength in the labor market, with wage growth outpacing inflation," Cecilia Seiden, vice president of TransUnion’s retail business, said in a press release.

However, Deloitte research shows more consumers will be making even more holiday-related purchases this year — 95% compared to 92% in 2022 and 88% in 2021.

Watch out for the “danger zone”

Suze Orman never minces words when it comes to saving money.

In a recent blog post, she warns readers to stay out of the “overspending danger zone” that is the holiday season stretch from Thanksgiving to New Years Day.

“I have zero patience for anyone who thinks love permits them to spend money on travel and gifts that will end up on a credit card charging 20%+ interest,” she wrote.

“Gifts are a want, not a need. If you can’t afford to pay off a credit card in full, then that is money that shouldn’t be spent.”

If you don’t think you can get the gifts you want without digging yourself into debt, Orman suggests getting creative and doing small projects like baking and crafts to give as gifts and involving your family in the process.

For the adults in your life, she suggests offering to watch their kids or committing to some quality time with your friends.

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Less gifts, more deal hunting

Shoppers are making their lists and checking them twice for deals and discounts, determined to have a fun and memorable holiday season without digging themselves into a deep debt hole.

Although some worry they won’t be able to reign in their shopping to stay within budget, the Deloitte report also finds consumers are adapting their spending strategies to balance higher prices with their fiscal goals.

For example, shoppers are planning to cut down on the number of gifts they’re buying this year with the average number going down to eight this year from nine in 2022. Many also plan to increase the number of gift cards as a hedge against inflation (given their fixed amounts).

About two-thirds of shoppers say they’re intending to do some shopping during the Black Friday to Cyber Monday week in order to snag some deals online as well.

As you embark on your own annual shopping spree (if you haven’t already) look around online or in stores to compare prices and ensure you’re getting the best deal available. Some online services make it effortless for you to price-check every item in your list and could potentially save you hundreds of dollars.

If you’re struggling to stay on budget this year, consider giving the classic cash stuffing hack a go next year. You take your paycheck out in cash and separate it into different labeled envelopes based on your spending categories and saving goals. So you can stash away cash for your holiday haul every month then take it with you into the store when it’s time to shop — and whatever you have in the envelope is how much you have to spend. You could even try it this year if you have some cash saved up.

If you’ve been good this year and you have your holiday budget already stashed away, you could make use of a rewards or cash-back credit card without ending up with a large amount of debt come January. You can then use the money you’ve saved to pay off the balance and reap all the points or rewards your card offers.

*— with files from Moneywise editor Samantha Emann

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.