Holiday Spending Reality Check: Which States Are Drowning in December Debt?

The holiday season brings joy, but it also brings a harsh financial reality for millions of Americans. While twinkling decorations and gift-wrapped packages feel festive, the credit card statements that follow often tell a different story. According to analysis based on PricewaterhouseCoopers’ 2025 Holiday Outlook, the average American plans to spend around $1,522 on holidays this year—but not all states are equally prepared to handle that bill.

The Overspending Crisis: 29 States Face Budget Breaking

MoneyLion’s comprehensive state-by-state analysis reveals a sobering truth: 29 states are likely to overspend beyond their discretionary budgets this holiday season. The problem isn’t new—it’s the same issue plaguing households nationwide: holiday expenses keep climbing while actual spending power hasn’t caught up.

The research adjusted national holiday spending figures against each state’s cost of living and compared them to standard monthly discretionary budgets using the 50/30/20 financial planning rule. The findings? A striking disparity across the country.

The 10 States Most Likely To Exceed Their Holiday Budgets:

Kentucky residents face the steepest challenge, projected to overspend by $306. Louisiana follows at $296 over budget, with Montana at $273. West Virginia ($267), Arkansas ($253), Mississippi ($234), Alabama ($228), South Carolina ($221), Oklahoma ($215), and Missouri ($210) round out the top ten states most vulnerable to holiday financial stress.

What these states share is a troubling pattern: holiday expenses have risen sharply, but post-tax incomes in these regions haven’t kept pace with inflation. Families here face a difficult choice—either trim their holiday spending or raid savings and accumulate debt.

The Budget Winners: 21 States With Money Left Over

On the opposite end of the spectrum, 21 states actually project surplus discretionary funds after the holiday season. These aren’t magical unicorns; they’re the result of higher regional incomes paired with moderate spending habits.

The 10 States Best Positioned To Stay Within Budget:

New Jersey leads with $307 remaining in discretionary budgets after holiday spending. Utah follows at $281, New Hampshire at $245, and Washington at $225. Colorado ($201), Nevada ($237), Maryland ($137), Virginia ($154), South Dakota ($111), and Massachusetts ($107) round out the list of states with post-holiday financial cushions.

The common factor here is straightforward: higher post-tax household incomes provide genuine financial flexibility. Even when these families spend generously on gifts and festivities, they’re not exceeding their budgetary limits.

Practical Strategies To Protect Your Holiday Budget

If your state appears likely to exceed its budget, you’re not destined for financial disaster. Strategic moves now can prevent December overspending from bleeding into January debt.

Build a Reality-Based Budget, Not an Aspirational One

Most holiday budgets fail because they’re based on wishful thinking rather than actual financial capacity. Instead of fantasy numbers, sit down with your actual bank statements and determine what you can genuinely spend without touching emergency savings. A slightly scaled-back budget now beats financial stress later.

Create a Dedicated Holiday Spending Account

Visibility matters. Moving your holiday money into a separate account where you watch the balance decrease in real time creates psychological accountability that prevents impulse purchases. When you see the money vanishing, spending restraint naturally follows.

Reframe Gift-Giving Expectations

Meaningful doesn’t mean expensive. A thoughtful handwritten note, shared experiences, or carefully selected small gifts often resonate more deeply than costly presents. Have honest conversations with family and friends about trimming spending—you’ll likely discover others feel the same relief at permission to spend less.

Maximize Rewards and Cash-Back Opportunities

Every dollar saved helps. Browser extensions and rewards applications can recover small percentages on holiday purchases. While individual returns seem modest, they accumulate across dozens of transactions into genuine budget relief.

The Bottom Line

Holiday overspending isn’t inevitable, even in states most likely to exceed their budgets. Understanding your state’s financial challenges and taking deliberate action now can transform December from a financial crisis into a manageable seasonal event. The key is honest assessment, realistic planning, and consistent discipline throughout the shopping season.