Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Nov 20, 2012

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The holiday season can be a joyful time with gifts, family, and food; but many people worry about how to pay for all of the expensive additions to the festive season. With only weeks until Christmas, many individuals are researching personal loans and layaways to pay for in-store and online commerce.

Days Left to Shop

Black Friday, Small Business Saturday, Cyber Monday — the days to shop seem to ever expand. And many retailers go even further. Now many retailers including Wal-Mart, Target, Sears and The Gap will open on Thanksgiving Day to accommodate for crowds and increase profits.

Although worker protests have occurred, it does not stop shoppers from buying.

The National Retail Federation estimates holiday sales for 2012 will total about $586.1 billion, a 4.1 percent increase from 2011. An estimated $96 billion will be spent over the internet during the 2012 holiday season.

Finding Joy in Online Commerce

While some people are stressed by mounting personal loans and credit debt, others find shopping to be a relaxing break.

A Sallie Mae-funded national survey of 2,231 adults revealed that many Americans find the holidays to be a stressful time. However, 40 percent of surveyed adults said online shopping is their favorite way to remain relaxed. 

“Families want less stress and more meaning during the holidays,” John Ward, senior vice president at Sallie Mae, said.

Still, 25 percent shop on Black Friday and Cyber Monday to receive the best bargains.

But shopping — be it online or in person — is not without potential risk. Many families reported being concerned about a budget. Although 55 percent of women surveyed said that they create a holiday budget yearly, only 35 percent stick to their budgets.

Families are expected to spend $750 on gifts this year. For many struggling families, the only resort is using high interest credit and personal loans.  

Personal Loans, Payday Loans and Prepaid Cards: New Forms of Holiday Finance

According to the 2012 Underbanked Financial Sentiment Index released by Think Finance, consumers of all income levels are planning on spending conservatively this season. The study surveyed 1,000 Americans who supplemented traditional banking accounts with alternative financial services such as personal loans, payday loans, prepaid debit cards and direct deposit advances.

Nearly half surveyed stated that they do not expect to have enough money to cover holiday expenses. Eighty-five percent predicted they will spend the same amount of money, or less, on gifts this year. Fifty-four percent are planning on spending $500 or less while 27 percent are planning to spend between $500 and $1,000.

The added strain caused a surprising finding: 45 percent of respondents said the “holiday season brings so much financial pressure that they wish they could skip it altogether.”

Many households, even in the upper-income bracket, report using layaway programs. Of the respondents that said they would use a layaway program, 50 percent were in the $75,000-$99,000 income bracket and 32 percent were in the $100,000-or-more bracket.  

“The economy has shown gradual improvement in recent years, but everyday Americans are still working hard to cover expenses marking holiday spending particularly stressful,” Ken Rees, CEO of Think Finance said in a release. “The fact that people across income levels are turning to layaway makes it clear that we need more financial options.”

Although some people feel secure with the current and future state of the economy, over half of respondents are followed by debt such as credit cards and personal loan debt. Fifty-nine percent reported that debt will follow them into the New Year — the one holiday element that can last all year long.