Tony Dobrowolski | Out Of The Pages: It's the most sobering month of the year
PITTSFIELD >> Consumer spending tends to take a hit during the month of January, mainly because our end-of-the year hijinks have left us with little money to spend.
The first month of the year is when the bills start coming in for all the excess that took place during the holiday season. All that revelry — the food, the parties, the gifts — it all looks different now when we actually have to pay for it.
Hard numbers can have a sobering effect on your pocketbook let alone your psyche.
I'm sure lots of people feel this way now that the tree's been taken down, and the lights have been put away. But the interesting thing about this phenomenon is that a lot of people don't care at all. They're happy to be in debt at this time of the year.
At least that's the conclusion reached in a national consumer survey conducted by MagnifyMoney.com. Despite borrowing money at high interest rates to fund holiday purchases, 85.7 percent of Americans have no regrets about their holiday purchases, the survey found. And for those who fall into that category, 13.3 percent wished they'd spent even more.
I wonder what this mentality says about us as a people. To me, it suggests that we value having a good time over everything else. But, maybe we shouldn't be so surprised by our behavior.
After all, the federal government spends gobs of money every year on everything imaginable without any idea of how it is going to pay it back. There's a lot of yelling and political posturing that comes out of Washington, but I've yet to hear a concrete, well-thought out plan from representatives of any party on how we trim down our trillion dollar national deficit.
Spending more money isn't the answer. Neither is cutting everything to the bone. Since compromise seems to be a dirty word in politics now, it looks like we're just going to keep riding that runaway train to ruin or oblivion, whichever comes first. That's a frightening thought.
But if our leaders continually spend money that they don't have, why should we expect our citizens to act any differently.
Here are some more sobering statistics from MagnifyMoney.com's survey.
• American consumers tend to spend without a plan. Over half of those surveyed (50.7 percent) set no holiday spending budget at all. An additional 15.1 percent set a budget, but ignored it and spent more than they planned anyway. That means almost two thirds of all the consumers who were surveyed (65.8 percent) had no control over their holiday spending whatsoever.
• After spending money on holiday gifts, a majority of Americans are considered to be "broke" — 56.3 percent of those surveyed had less than $1,000 combined in their checking and savings accounts; 23.8 percent had less than $500 in their accounts, while 24.8 percent had less than $100.
• Here's a major reason why people are broke in January — credit cards are used to fund a big portion of holiday purchases. According to the survey, 38.3 percent will be unable to pay off their credit cards this month. High interest rate credit cards are often used to fund holiday debt.
The good news is that 61.7 percent of those surveyed will be able to pay their credit card balances in full. It will take longer for an additional 27 percent to pay off those bills, but they will still be able to make the minium payment. The remaining 11.3 percent — slightly more than 1 in 10 — won't be able to pay the minimum amount.
For those who fall into that category, MoneyMatters estimates that they can expect to stay in debt for 25 years and will end up paying more interest than they originally borrowed.
At least gas prices are still low. A caller to the business department on Friday stated that one Berkshire County outlet was selling unleaded regular at $1.86 a gallon.
So if you can't afford to buy anything this month, at least you'll be able to drive somewhere.