What was once an adorable annual ritual is already a serious financial problem.

2 minute read

There are many reasons why Americans are struggling with debt.

Illness. Job loss. Divorce. Even natural disasters.

But back-to-school shopping?

As both a CPA and a parent, I think this is one of the most ridiculous reasons to go into debt. Yet over the past three years, it’s been a steadily increasing trend. That’s according to a new poll from LendingTree released MONDAY.

It shows that exactly a third of the parents expect to spend so much on back-to-school shopping in August, they won’t be able to pay off their credit cards in September. Last year, the number was 30 percent, and in 2019, it was 26 percent.

That means even a pandemic didn’t slow down this particular kind of debt.

The reason for this season

On one level, it’s easy to understand why. The parent side of me wants my children to be happy, even as the CPA side of me says it’s irresponsible to go into debt to do that – because I’m actually hurting their long-term prospects if I can’t afford to provide for them later on because I’m broke now.

This explanation makes sense when you consider that during the depths of the pandemic, poll after poll showed Americans cut back on their spending. They also started doing something I had been advocating for decades and just never happened: They started using a monthly household budget and sticking to it.

Now that the pandemic is easing, so is the fear that drove them to save – and back-to-school shopping is the perfect time to prove everything is back to normal. Sadly, however, if this is the new normal, it’s unsustainable. Back-to-school spending can’t keep going up forever. It will eventually come crashing down.

A sign of things to come?

It might seem alarmist and even silly to claim back-to-school shopping will break the backs of Americans’’ bank accounts. After all, LendingTree’s chief credit analyst Matt Shulz told Debt.com, “It’s not like you’re buying them the latest Playstation or something like that. This is stuff that you hope will pay dividends down the road by setting them up for success in school.”

That’s true, but I’m looking beyond just back-to-school shopping. Next up is winter holiday shopping – and Americans historically go into debt there, too.

Last year, CNBC compiled SEVERAL  studies showing that the average American racks up a holiday debt of well over $1,300. To be clear: Every year, we spend $1,300 more on the holidays than we can afford to pay off the next month. That’s gone up every since 2015.

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About the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

I’m a certified public accountant who has authored two books on getting out of debt, Credit Hell and Power Up, and I am one of the personal finance experts for Debt.com. I have focused my professional endeavors in the consumer finance, technology, media and real estate industries creating not only Debt.com, but also Financial Apps and Start Fresh Today, among others. My personal finance advice has been included in countless articles, and has appeared in the New York Times, the Washington Post, Forbes and Entrepreneur as well as virtually every national and local newspaper in the country. Everyone should have a reason for living that’s bigger than themselves, and besides my family, mine is this: Teaching Americans how to live happily within their means. To me, money is not the root of all evil. Poor money management is. Money cannot buy happiness, but going into debt always buys misery. That’s why I launched Debt.com. I’m glad you’re here.

Published by Debt.com, LLC