The holidays aren’t just a challenge for low-income families across America. As a time when most of us loosen the belts on our budgets, the season packs on the pressure when it comes to our finances. From buying the latest gadgets for our kids to loading up on groceries for the big feast, the costs of the festivities add up, and it often leads to New Year’s debt regardless of your financial standing.

Overspending, overreaching, or overextending: it doesn’t matter what you call it, it’s often thought of as the reason why people get into trouble with their finances. Playing fast and loose with the cash in the bank doesn’t just happen during the holidays. Extravagant spending habits at any time of the year can upset the tentative balance of your checking account. While the media likes to point to avocado toast, pumpkin spice lattes, and now millionaire’s bacon as easy culprits for your financial woes, they’re often just scapegoats for a systemic problem. The primary reason why people go into debt is a lot more complicated, with or without the holidays.

A cross-section of the nation: bad finances are a reality for most

The latest data from SuperMoney shows Americans are applying for credit cards, payday loans, and lines of credit to cover household expenses more often than going on wild shopping sprees as clickbait articles like to suggest. Roughly one-third of Americans who apply for personal loans do so to help pay for repairs, necessary purchases, or bills that they can’t ignore. To a much lesser degree, they apply for these products to consolidate debt, cover moving expenses, or pay for medical emergencies.

It makes sense that so many of them rely on fast and easy ways to borrow money. According to a CareerBuilder poll, about 78 percent of respondents admit to living paycheck to paycheck, despite having a full-time job. Meanwhile, a GoBankingRates study shows 35 percent of those surveyed have less than $1,000 set aside in savings, while another 34 percent have none at all.

How is it that so few have savings?

Though the nation’s unemployment rate fell to 4.1 percent in the last quarter, stats show hourly earnings have decreased overall in the last several years. Wage stagnation isn’t just an American problem. Experts say it’s a universal issue affecting most labor markets around the world, though its effects may be at its strongest in the US since the country is still recovering from the recession it faced in 2008.
Wage stagnation is joined by the rise of involuntary part-time work and underemployment. This, at the same time when inflation is allowed unfettered growth, makes it hard for the average person to succeed. They make just enough to scrape by during a normal week. During unusual weeks when faced with unexpected emergencies (or expensive holidays), they must turn to online loans for support.
As for frivolous overspending? Without the support of a robust savings account, those living paycheck to paycheck usually isn’t wasting their money on frivolous things like brunch. It’s hard to waste five dollars a day on a latte when you can’t keep up with the basic cost of living.

In 2017, consumer debt is at its highest in over ten years. According to the Federal Reserve of New York, the total household debt peaked at $12.84 trillion in the summer, which is $164 billion more than it was in 2008 at the start of the Great Recession. Bad finances are a nation-wide issue that’s a result of the imbalances in the labor market. Things like underemployment and wage stagnation are what’s more likely to make it difficult to meet the rising cost of living — not reckless overspending. And until these issues are addressed, everything in life — not just the holidays — will be a challenge for the average person.

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