With the holiday season nigh upon us, its safe to say that there’s going to be a shopping frenzy all around the world.
At present, estimates from retailers show that there’s going to be a sales boon projected to go all the way up to $1 trillion. A significant figure, considering this will be the first time in history that this happens.
While the holidays are all about spreading love, having some fun and making merry if need be, consumers at times find themselves getting burnt out. Not just from a physical perspective, but also, the monetary aspect of things.
The buoyant holiday shopping forecast made public by eMarketer can be attributed to a number of key indicators. The biggest contributor being the economy which seems to be in good health. Unemployment records are also at an all-time low and consumer confidence is quite sound.
While everything sounds dandy on paper, the same is not true in real life situations. There are a couple of American households that will not be able to enjoy the spirit of the season. Data from multiple surveys show that about 2 in 5 American households actually live paycheck-to-paycheck.
With this in mind, it’s easy to see just why there’s good reason for people to avoid overindulging in the festivities. Knowing just when to stop with the indulgence is thus, quite important. Here are some of the tell-tale signs for you to know when to put a hold on things.
Failure to Adjust to Rising Rates
Typically, this is what happens when an economy thrives. As the interest rates climb, certain commodities like household gadgets are usually the first to take a hit. According to Jonathan Smoke, a chief economist who works for Cox Automotive, consumer payments have risen by about 16% in the last annum.
In his analysis, he cited that the ricochet effect is that the extra finances start eating into people’s spending habits. At present, he believes that it’s nearing the point where people with disposable incomes won’t be able to keep up with the trend.
As Smoke posits, the only thing keeping consumers afloat is the fact that there has been some paycheck relief in the form of income-tax deductions.
A report by Bankrate.com shows that credit card rates in the last annum have risen from 16.7% to17.6%. Smoke also revealed that there has been a steady rate increment on all other loans. When reviewing the loan points for new and used vehicles, he noted that there was an existing 1.5 percent difference.
Borrowers are also finding it harder than ever to qualify for loans in the last 3 years because of bank credit conditions getting tighter. One of the hardest hit sectors is the automotive market. New vehicles sales has nowadays softened. At the same time, sales made for used vehicles has relatively remained constant.
Not taking Notice of the Tax Situation
For businesspersons, this has translated positively to the nature of their operations since consumer confidence is at an all-time high.
Still, it’s possible that the lower withholding amounts have been wrongly interpreted by some people. Once this happens, it’s plausible for one to overestimate their tax benefits. This state of mind is dangerous since it may prompt one to fail to take advantage of deductions that served them well in the past.
A survey of people conducted by Fidelity Investments showed that about 82% of donors were looking to maintain or increase their charitable contributions in 2018.
While this is done in good faith, a warning from the Treasury Department shows that one 1 in 5 households will have to convert from itemizing to taking on the generous standard deductions. Since they’ll be in the dark about this, some itemizers will fail to realize that their charitable deductions are no longer viable.
Not Heeding Red Flags
During the holidays, consumer-debt counselors usually make the big bucks. Most of their time is usually dedicated to giving people advice on how to avoid going over their heads as the festive season progresses.
Some of the popular suggestions include things like avoiding shopping while stressed, in a hurry, or when tired. The key reason they are against these behaviors is because the mind is usually clouded by the pressure from all around.
Ideally, if you’re looking to binge over the holiday, it’s best to do so on a budget. Things like postage & shipping, decorations, miscellenous expenditure, travel, and newspaper carriers can be quite taxing on finances if left unchecked.