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Why consumers overspend during the holidays — and what to do about it

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2 years ago

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Betsie Van Der Meer | Digitalvision | Getty Images

The holiday season is a time to give thanks, reflect on the past year, and spend time with family and friends. However if you’re not careful, it can also be a time you overspend on holiday purchases.

About 83% of Americans plan to buy gifts for friends and family this holiday season, according to a recent NerdWallet poll.

Americans expect to spend an average $1,014 on Christmas or other holiday gifts in 2024 — “substantially more” than the $923 reported last year, according to a Gallup poll published Oct. 25.

Roughly 10% of consumers expect to draw from their emergency fund to buy gifts, and 9% will prioritize gifts over household bills like utilities and debt payments, according to the NerdWallet survey.

Almost half of shoppers will fund this year’s spending with loans or credit cards, according to a recent EY survey. Meanwhile, 28% of people are still paying off credit-card debt from the 2023 holiday season, NerdWallet found.

People have an innate impulse to overspend, experts say. They are “wired” to be consumers, said Brad Klontz, a psychologist, certified financial planner and behavioral finance expert.

“For 99% of our time on earth, thinking about the long-term future hasn’t served us very well,” said Klontz, who is a member of CNBC’s Financial Advisor Council and the CNBC Global Financial Wellness Advisory Board. “Meeting our immediate needs was what it was all about.”

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The short-term gratification of giving gifts to loved ones can eclipse the long-term focus that’s needed to be good with money, Klontz said. That’s where many people fall short, he said.

“We can overspend because our long-term goals are much more abstract, and it actually requires us to do extra levels of cognitive processing to delay instant gratification,” he said.

Additionally, consumers may feel the social pressure to spend more than they might like because they don’t want to appear “cheap,” said Andrea Woroch, a consumer finance expert.

Many companies also promote deals — on Black Friday and Cyber Monday, for example — that can create a “buying frenzy,” she said.

How to avoid overspending during the holidays

Cavan Images | Cavan | Getty Images

There are various ways for consumers to keep their holiday tabs within a reasonable range, experts said.

Here are some of their tips.

  • Develop a spending plan now around how much to allocate to the holiday season, Klontz said. It’s not too late, even over Black Friday weekend. Consumers can use a gift list tracking app like Santa’s Bag to track purchases and actual spend, Woroch said.
  • Think beyond gifts, Woroch said. There are many other potential seasonal expenses, including groceries to feed out-of-town guests or for holiday feasts, holiday party attire, family photos, greeting cards and postage, seasonal outings, dinners with friends, fundraising events at your kids’ school and donation drives. You may need to cut back on certain costs or spend less on gifts to accommodate these, she said.
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  • Set gift expectations with family and friends now, Woroch said. This may mean focusing on kids only or setting up a “Secret Santa” exchange so you’re only responsible for one gift rather than many, she said. Instead of a physical gift, perhaps find an activity to do together instead. Or, set a gift budget, suggesting a lower amount this year, Woroch said.
  • Tap into free rewards to offset gift costs, Woroch said. For example, she recommends signing up for free retail loyalty programs to earn money back to use towards other gift purchases; shopping through cash-back portals like CouponCabin.com or Rakuten for online purchases; and downloading a browser extension like Fetch to earn rewards or free gift cards.
  • Take time to reflect on your long-term goals that “really matter to you,” Klontz said. This can help rein in the impulse for short-term purchases.

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Personal Finance

Navigating Residential Real Estate and Mortgage Strategy

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3 weeks ago

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August 15, 2026

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The 2026 residential real estate market presents a nuanced landscape for homebuyers, current homeowners, and property investors. With benchmark mortgage rates adjusting alongside Treasury yield movements, real estate strategies require careful evaluation of borrowing costs, local market supply dynamics, and long-term home equity management.

Adapting Homebuying Strategies to Mortgage Dynamics
Prospective homebuyers are adapting to fixed 30-year mortgage rates hovering between 6.0% and 6.8%. While borrowing costs are elevated compared to historical lows seen in prior decades, moderating home price growth across several regional markets is creating selective opportunities for buyers with strong credit profiles.

Homebuyers are increasingly utilizing strategic mortgage options:
– Builder Rate Buydowns: Purchasing new construction homes where developers offer temporary or permanent interest rate buydowns to lower initial monthly payments.
– Adjustable-Rate Mortgages (ARMs): Selecting 5/1 or 7/1 hybrid ARMs with strict rate caps for short-to-medium-term housing plans.
– Points and Financing Structure: Evaluating upfront discount point purchases to secure lower fixed interest rates over the loan term.

Home Equity Utilization and Renovation Financing
For existing homeowners holding low-rate legacy mortgages, moving to a new property often entails relinquishing favorable debt terms. Consequently, many homeowners are choosing to renovate and expand existing properties rather than sell.

Home Equity Lines of Credit (HELOCs) and home equity loans allow homeowners to access accumulated property equity for capital improvements without disturbing their primary mortgage rate. Utilizing home equity for value-adding property renovations can enhance living space while increasing long-term property values.

Strategic Real Estate Investment Guidelines
For residential property investors, achieving positive cash flow requires strict underwriting standards:
– Stress-Test Operating Expenses: Factor in rising property insurance premiums, local property taxes, and ongoing maintenance reserves.
– Focus on High-Growth Rental Markets: Target regions experiencing steady job growth and sustained tenant demand.
– Maintain Cash Buffers: Ensure property portfolios maintain dedicated emergency reserves to navigate unexpected vacancy periods or major repairs.

Actionable Homeownership Steps
1. Evaluate Complete Monthly Housing Costs: Assess property taxes, homeowners insurance, and HOA fees alongside principal and interest.
2. Leverage Renovation Equity Carefully: Utilize equity loans strategically for renovations that generate long-term property value.
3. Prioritize Credit Score Optimization: Secure top-tier credit scores prior to mortgage pre-approval to qualify for competitive lender pricing tiers.

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Personal Finance

$20,000 Caution Bond Requirement for US Visa Applications imposed on 50 Countries

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4 weeks ago

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August 8, 2026

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The United States Department of State has officially implemented a revised visa policy introducing a mandatory posting requirement for caution payments of up to $20,000 on select foreign travel applications. Under the updated regulatory framework, consular officials are authorized to require temporary nonimmigrant visa applicants from targeted foreign countries to post a refundable financial bond of $20,000 as a condition for visa issuance. The policy mechanism is designed to address diplomatic concerns regarding high overstay rates among temporary visitor, business, and educational visa categories.

The caution bond pilot program applies selectively to foreign nationals from designated countries whose diplomatic entities record historical visa overstay rates exceeding established federal thresholds. Under administrative guidelines published by the State Department, the full financial deposit is posted directly to a dedicated federal escrow account prior to final visa issuance. The entire caution payment is automatically refunded to the applicant upon verified proof of timely departure from the United States in strict compliance with the authorized duration of stay. Conversely, failure to depart within the legal timeframe results in full forfeiture of the posted financial bond to the United States government.

Diplomatic representatives and travel policy experts have expressed varying perspectives regarding the operational implementation of the caution bond system. Administration officials emphasize that the measure serves as an effective, market-based incentive to enforce international travel compliance and preserve domestic immigration security standards. However, international trade organizations and foreign diplomatic missions have raised concerns regarding the financial burden imposed on legitimate business travelers, foreign students, and commercial partners from developing nations.

The United States finalized the rule to make the temporary visa bond program permanent, taking effect on August 3, 2026. The updated permanent regulation replaces the prior 12-month pilot, eliminates the lowest $5,000 tier, and raises the maximum required bond amount to $20,000 for specific B-1/B-2 business and tourist visa applicants.

Here is the list of the 50 countries on the list as o August 3, 2026

African Nations (31 Countries)

  • Algeria
  • Angola
  • Benin
  • Botswana
  • Burundi
  • Cabo Verde (Cape Verde)
  • Central African Republic
  • Côte d’Ivoire (Ivory Coast)
  • Djibouti
  • Ethiopia
  • Gabon
  • The Gambia
  • Ghana
  • Guinea
  • Guinea-Bissau
  • Lesotho
  • Malawi
  • Mauritania
  • Mauritius
  • Mozambique
  • Namibia
  • Nigeria
  • São Tomé and Príncipe
  • Senegal
  • Seychelles
  • Tanzania
  • Togo
  • Tunisia
  • Uganda
  • Zambia
  • Zimbabwe

Asian & Eastern European Nations (11 Countries)

  • Bangladesh
  • Bhutan
  • Cambodia
  • Georgia
  • Kyrgyzstan
  • Mongolia
  • Nepal
  • Papua New Guinea
  • Tajikistan
  • Turkmenistan
  • Uzbekistan

Caribbean & Latin American Nations (5 Countries)

  • Antigua and Barbuda
  • Cuba
  • Dominica
  • Grenada
  • Venezuela

Oceanian Nations (3 Countries)

  • Fiji
  • Tonga
  • Vanuatu

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Personal Finance

Next-Generation Retirement Planning: Managing Longevity Risk and Variable Income Streams

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4 weeks ago

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August 7, 2026

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Retirement planning strategies are evolving in 2026 to address increased life expectancies, shifting dynamic market conditions, and the transition away from traditional defined-benefit pensions. Individual investors and financial advisors are abandoning rigid retirement models in favor of flexible, multi-asset strategies designed to mitigate longevity risk and preserve purchasing power over multi-decade retirement horizons.

Mitigating Longevity Risk with Dynamic Asset Allocation
As average life expectancies extend past eighty-five years, one of the primary financial risks facing retirees is outliving their accumulated wealth. Traditional fixed income allocations—such as the standard 60/40 equity-to-bond portfolio—are being reevaluated to ensure portfolios generate sufficient capital growth alongside reliable income.

Financial planners recommend maintaining a meaningful equity allocation throughout retirement to offset long-term inflation erosion. High-dividend equity funds, global real estate investment trusts (REITs), and inflation-indexed Treasuries are combined to create diversified portfolios that deliver both growth and income stability.

The Transition to Dynamic Withdrawal Strategies
The classic “4% safe withdrawal rule” is increasingly replaced by dynamic withdrawal strategies that adapt annually based on market performance. Under a dynamic withdrawal framework, retirees adjust their annual distribution rates within pre-set caps and floors:
– Market Upside: During strong market returns, retirees can increase discretionary spending or fund family legacy gifts.
– Market Downturns: During market pullbacks, spending distributions are temporarily reduced to prevent sequence-of-returns risk and preserve core investment principal.

Guaranteed Lifetime Income Options and Deferred Annuities
To establish a guaranteed baseline for essential living expenses, individuals are incorporating modern fixed-indexed and deferred longevity annuities into their broader retirement architectures. Modern annuity structures offer competitive return caps, transparent fee schedules, and inflation-adjustment options.

By funding essential expenses—such as housing, healthcare, and insurance—with guaranteed income streams from Social Security, pensions, and annuities, retirees can manage discretionary investment portfolios with greater flexibility and lower emotional stress during market volatility.

Actionable Steps for Future Retirees
1. Calculate Baseline Retirement Expenses: Determine fixed living costs and map guaranteed income sources to cover essential expenditures.
2. Adopt Flexible Withdrawal Rules: Implement dynamic spending rules to protect investment principal against market downturns.
3. Incorporate Inflation-Protected Assets: Maintain exposure to dividend-growing equities and inflation-indexed bonds to safeguard long-term purchasing power.

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