“If you head out the door or go online with no list, no budget and just a bunch of good intentions, you could wind up swimming in debt,” Dennis Johnson warned.
HOUSTON — The countdown to Christmas is officially on, and so is the pressure to shop. But before you hit “add to cart,” financial experts warn that the wrong money move now could leave you paying for the holidays long after the decorations are packed away.
KHOU 11’s Cheryl Mercedes sat down with Dennis Johnson, Regional Executive and Managing Director at Bank of America, to talk about the biggest holiday debt traps and what you can do to stay financially grounded this season.
Johnson says one of the most common mistakes people make is going into the holidays unprepared.
“If you head out the door or go online with no list, no budget and just a bunch of good intentions, you could wind up swimming in debt,” Johnson said.
When asked who is most at risk of accumulating holiday debt, Johnson didn’t hesitate.
“Anybody that believes they have to buy a gift for every single person and hasn’t taken the time to sit down and write out a list and a budget for each person,” he said.
“Buy now, pay later deals” may look like a holiday lifesaver, but Johnson warns they can quickly backfire.
“We should have about three months of reserve savings for emergencies. When you start to become really aggressive during the holidays and go into some of those other things that are critical, if something happens, you’re going to find yourself in a lot of trouble,” he said.
There are some red flags that you’re sliding into a debt spiral. One big warning sign, Johnson said, credit card habits suddenly change.
“If you’ve been paying your credit card balances off each month for the first nine or ten months of the year and you turn around in February and you can’t do that, you probably spent too much,” Johnson said.
The smartest move you can make right now, Johnson advises, is to slow down, plan and stay organized.
“You have to make a list, check it twice, make sure you’re being very thoughtful about what you’re going to get for the folks you love,” he said.
Johnson also shared one final reminder as shoppers feel the pressure to spend. The best gift doesn’t cost a thing.
“The best gift you can give someone isn’t sold online or in a store; it’s time, connection and making memories, all without going into debt,” he said.
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