Don’t Beat Yourself Up for Going Into Debt

The scolding usually starts around Thanksgiving. Don’t go into debt during the holidays, says that voice in your head. Remember last year? That was bad. Here’s how to save money instead. You resolve to be more responsible so you don’t have to spend January and February eating scrambled eggs for dinner, atoning for December once again.

But then, inevitably, the holiday spirit wraps you up in its soft, sparkly, expensive embrace, and you wind up spending more than you intended. Possibly more than you can afford. A recent survey found that about 40 percent of Americans have taken on debt during the holidays, and one in five said financial stress ruins their enjoyment of the season. A friend told me she’s taking on $3,000 of credit-card debt this year to afford to visit her family at Christmas, and she’s furious with herself for not planning better.

Many people will tell you that the key to getting out of this debt cycle is to try harder, budget better, tighten your belt, think ahead, put your head down and buy less stuff. Stop being so materialistic and frivolous; exercise some willpower! But it’s also clear that this messaging — which is everywhere — hasn’t helped. Holiday debt has only increased in recent years. And beating yourself up about it only makes you feel worse about a larger system that makes most of us feel pretty bad already.

In her new book, You Don’t Need a Budget, financial educator Dana Miranda makes the case that debt — including credit-card debt — isn’t something to feel guilty about. Instead, it’s a tool — one that many, many people use, especially at this time of year. “When you think of debt as an evil that you’re supposed to avoid as much as you can, it becomes this shameful hole that you have to dig yourself out of,” says Miranda. “But for the majority of people, debt is a necessity to get through day-to-day life, especially during times when heavier spending is expected.”

Miranda likens “budget culture” to diet culture; both preach rigid, restriction-based formulas that don’t actually work for most people. Maxims like “calories in, calories out” and “spend less than you make” are alluring because they’re simple and logical, but the circumstances of life are never so cut-and-dry or within your control. Just as a large body of research has found that diets tend to backfire, Miranda points to a 2018 study by researchers at the University of Minnesota who discovered that budgeting does not, in fact, appear to help people achieve long-term financial goals; its main effect is to increase anxiety.

Would it be ideal if we could all pay our credit-card bill in full every month? Sure. Credit-card debt carries comparatively high interest rates; it’s “expensive” debt that can compound quickly. But by deeming credit-card debt “bad,” you don’t allow for the nuances of how it can improve your quality of life, says Miranda.

Here’s an alternative thought experiment: Let’s say your credit-card interest rate is 24 percent. You then use your card to buy a $2,000 couch that was 50 percent off for Black Friday (so, $1,000), and take three months to pay off the resulting bill. Bottom line, you still paid less for the couch by buying it when it was on sale, even though you accrued debt (and around $40 in interest on that $1,000 purchase) to do so. Traditional budgeting advice would tell you to save up for the couch before buying it, but you had no guarantee that the couch would still be on sale (or even available) by the time you could afford it. And this way, you got to enjoy the couch while you were paying for it rather than having no couch at all. My point is that debt — even carryover credit-card debt — can be beneficial as long as you don’t bury your head in the sand over it.

“Because of this belief that credit-card debt is bad, a lot of people just swipe and pray without fully understanding how the product works — which is by design,” says Miranda. “When we approach anything with an expectation of abstinence, we’re not prepared to manage the realities of our actions. Then when we inevitably do spend more than we can pay off that month, we don’t know how to deal with it, and we don’t want to reach out for help or even ask questions because we’re ashamed.”

What to do instead? Consider the possibility that avoiding debt entirely might not be realistic during certain periods in your life or certain times of the year. “What if you were to determine that next year, you’ll spend a certain amount on your credit card in December in order to have the holiday experience that you want?” suggests Miranda. “What does that mean for your financial circumstances going forward? Will you pay off that debt by the end of February, or will it take you a little longer? Either way, it’s a perfectly valid way of handling this situation, especially if you maybe don’t make enough income throughout the year to set more savings aside.”

In the meantime, she recommends writing down your expenses this month — not in a punitive way, but from a place of curiosity. “I encourage keeping a spending diary as a temporary exercise to become more conscious of your relationship to money and how you’re using it,” she says. “You can note how much you spent and where, as well as how it made you feel, what you gained from it or not.” Most people tend to get anxious and white-knuckled when they lose track of where their money is going. Keeping closer tabs will help you keep a cooler head and realize that even if your spending exceeded your paycheck, maybe it was worth it in this particular case.

The flip side of this exercise is that you’ll see which expenses didn’t serve you. “This time of year, there’s a lot of pressure to live a certain way or have a certain experience that costs money. And spending money on those things, if you don’t value them, creates its own kind of stress,” says Miranda. But don’t contribute to it by berating yourself, she adds. In the next 12 months, what kind of money-related shifts do you want to make in your life? Could you automate certain savings or look into getting a balance-transfer card to pay off your credit-card debt faster? If your credit-card debt continues to plague you, could you freeze your card during the holiday season next year and see what other resources are available? Could your next plane ticket home be a group holiday gift to you from your family in lieu of physical presents? Could you take on a second job for a period of time?

If the answer to most of those questions is “no,” that’s fine too. The point is to look at all your options before you decide what you’ll do differently — or not — in the future. “This is a great opportunity to pause, not necessarily to stop yourself from spending but to reflect on what’s working and what isn’t,” Miranda explains. “You should give yourself permission to take on debt if it helps you pay for something that’s important to you. But it’s also okay to let go of what you don’t want to spend money on, and what you want to change.”

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