Holidays a Tough Time to Reduce Debt

    The inevitable collision between year-end spending and budget restrictions is making this an uncomfortable holiday season for two vital groups in the American economy: Consumers and the federal government.

    American consumers, still wary of carrying debt — especially credit card debt — are spending at the lowest level in five years. Holiday sales were off by $1.8 billion after the Thanksgiving weekend, but jumped on Cyber Monday when online buyers spent $2.3 billion, a record for the digital shopping holiday.

    The retail industry expects total holiday sales to reach $604 billion, or 2.4 percent more compared to 2012. That increase represents the smallest growth since 2009. Most major retailers are forecasting sales increases of 1 to 2 percent. JCPenney, which expects a 10 percent growth, is the only major retailer seeing a significant gain over last year.

    The federal government, meanwhile, is wrestling with familiar spending problems of its own. Funding for the government runs out Jan. 15, and leaders from both parties are rushing to get something done before the U.S. House takes off for the Christmas holidays Friday.

    Neither Republican nor Democratic leaders want to be held responsible for another government shutdown like the one that closed some federal offices in October, but there are significant obstacles to overcome to avoid a repeat.

    “The Senate and the president continue to stand in the way of people’s priorities,” House Speaker John Boehner, R-Ohio, said in a speech on the House floor. “When will they learn to say ‘yes’ to common ground? When will they start listening to the American people?”

    Slow Start for Holiday Spending

    The season got off to a slow start over Thanksgiving weekend when shoppers did more browsing that buying. An estimated 141 million people were in stores, 2 million more than a year ago, but they spent $57.4 billion — down 3 percent in comparison.

    Spending on electronics is the hot item, especially for adults with children. A Harris Interactive poll of shoppers indicates that more than 20 percent of adults with children under age 18 purchased smartphones, tablets or computers.

    Buyers are reluctant to use credit cards for their holiday shopping. A survey by the National Retail Federation said 29 percent of shoppers are using credit cards. Forty-four percent said they would be using debit or check cards, and the rest are paying with cash.

    Debt Rises Every Day in Washington

    Just the opposite sentiment prevails in Washington, D.C., where Congress continues its tiresome approach to paying for anything. The federal deficit is up to 17.4 trillion and increasing every day. Republicans say they want to reduce the deficit by cutting spending. Democrats say they’ll agree to some cuts — as long as it includes tax increases.

    The key budget issues still to be resolved before the Jan. 15 deadline include:

    • Democrats want to extend long-term unemployment aid that expires on Dec. 28 for 1.3 million workers who’ve been jobless for longer than six months.
    • Republicans are pushing a measure to prevent a 24 percent drop in Medicare payments to doctors. The cost is estimated at about $8 billion.
    • Both sides are attempting to pass a Farm Bill, which sets priorities for food policy. It has existed for two years on a series of short-term extensions. If a bill is not approved, milk prices could double to more than $7 a gallon.
    • The Food Stamp Program is part of the Farm Bill and the divide is huge there. Republicans want to cut funding by $40 billion over the next 10 years. Democrats want it reduced $4 billion over the next decade.

    If the two sides can’t get things together fast enough, then Boehner says he will push to pass legislation that retains automatic spending cuts passed as part of the 2011 agreement. If nothing is resolved, sequestration goes into effect, automatically clipping $110 billion from the federal budget.


    Bill Fay
    Staff Writer

    Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it seven years ago, helping birth into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering college and professional sports, which are the fantasy worlds of finance. His work has been published by the Associated Press, New York Times, Washington Post, Chicago Tribune, Sports Illustrated and Sporting News, among others. His interest in sports has waned some, but his interest in never reaching for his wallet is as passionate as ever. Bill can be reached at

    In debt? We can help!

    • Amount
    • Type
    • Contact

    How much do you owe?

    What can we help you with today?

    Related Articles

    U.S. consumer concerned about debt

    Consumer Debt Grows as U.S. Economy Expands

    Americans are taking on ever larger debt loads as they struggle to maintain living standards. They are borrowing more on their credit cards, taking on a soaring levels of student debt and signing more and more personal loans, all making the next recession ...

    Continue Reading
    Interest rates will not budge

    Interest Rates Probably Not Budging in 2016

    During Alan Greenspan’s nearly 20-year reign as Chairman of the Federal Reserve, commentators used to look at the heft of the briefcase he carried to meetings to guess whether interest rates were about to rise or fall: thin case, no change; fat case, brace ...

    Continue Reading
    graph showing upward economic trends

    2014 Great Year For U.S. Economy, Can We Repeat In 2015?

    By most accounts, the United States economy had a glowing year in 2014.Unemployment was down, spending was up, housing prices continued to bounce back and gas prices plunged to rates we never thought we’d see again.Then again, millions of Americans ...

    Continue Reading
    Woman looking at bills on the floor

    Student Loans, Other Debts Are Stressing Americans More Than Ever

    The American Psychological Association (APA) and the Federal Reserve Bank of New York aren't working together on the mental and fiscal health of America — but they certainly could.The APA released its annual "Stress in America" survey on Feb. 11 and ...

    Continue Reading
    Top Financial News Stories of the Year

    Top 10 Debt-Related Stories of 2013

    Some phase of the economy is the No. 1 news story almost every year, but 2013 offered an interesting twist: It was possible to argue that nearly every financial story had equal parts good and bad news attached to it.It all depends on how you view ...

    Continue Reading
    Highest consumer confidence index rating since 2007

    U.S. Consumer Confidence Highest Since July 2007

    The bull run on Wall Street and a continued surge in home prices pushed consumer confidence to its highest level in almost six years.The Thomson Reuters/University of Michigan consumer confidence index jumped to 84.5, up more than eight points from April ...

    Continue Reading
    Economic indicators show the economy is improving

    U.S. Economy Is Slowly Improving

    The snapshot of the U.S. economy in the first week of May looks unusually promising.Almost every arrow economists want pointing up – home sales, auto sales, stock market – is up. Meanwhile, interest rates and unemployment figures continue to ...

    Continue Reading
    Economic indicators like housing and spending are confusing.

    Despite Positive Economic Indicators, Consumer Confidence Continues to Decline

    American consumers are a step slow in accepting the news that the U.S. economy really is on the mend.Consumer confidence and retail spending dipped in March, while the rest of the economy puttered along at a good-to-great pace.Housing starts in March ...

    Continue Reading
    Get Help Now

    Overwhelmed with debt? You have options for lower monthly payments!