Amid spikes in candy prices, record-high auto loan balances, elevated mortgage interest rates and the coming pressure to find deals during the holidays, this Halloween has consumers facing some serious financial scares.
If you feel like economic anxiety is lurking around this season, you aren’t imagining things. Here are five things spooking people’s finances right now.
1. Halloween candy and inflation
Halloween candy prices are up a staggering 15.3 percent, according to a report by the Century Foundation and Groundwork Collaborative, two progressive economic and public policy think tanks.
Items like seasonal peanut butter cups are seeing a 23 percent price hike. As prices rise, total Halloween spending is projected to reach a record $13.5 billion, with consumers spending an average of $115.14 per person, according to the National Retail Federation.
But what’s really scary is what families are willing to do to celebrate Halloween. According to a survey by LendingTree, 24 percent of respondents expect to take on debt for the holiday. (At least that’s down from the 35 percent who did so in the past.)
Higher-income folks are more likely to take on debt to finance trick-or-treat season, the survey found.
Unsurprisingly, 51 percent of those who used debt for Halloween purchases in the past say they now regret it. When asked why, they blamed two things: higher prices and the pressure to keep up with the Joneses.
I often share this financial idiom: Rich folks stay rich living like they’re broke. Broke people stay broke by living like they’re rich.
We don’t have many kids trick or treating in my neighborhood anymore. Many just go to the mall for the free candy handed out by merchants. But to cut costs, I only purchase snack-size versions of the popular brands. And no grabbing from the bowl. One piece per kid.
2. Financial pain at the pump
Volatile gas prices are much more frightening than any Freddy Krueger, Friday the 13th or other Halloween franchise flick.
The national average for a gallon of regular gasoline was $4.26 as of Oct. 21, according to AAA. In some parts of the country, moreover, that price would feel like a bargain. In California, the average was $6.11.
An Ipsos survey found that two-thirds of Americans say rising gas prices are directly straining their household budgets.
People are scared of the prices they’ll find when they pull up to their local stations, thanks in part to President Donald Trump’s decision to go to war with Iran.
If you’re looking for ways to save on gas, don’t do what I did once. It was like when you watch a horror movie, and you shout, “Don’t go in there!”
One evening, I was trying to make it to a station near my home that had the lowest price for gas. But it was closed by the time I got there. I passed several other open stations on my way home. I figured I had just enough gas to make it the next morning.
I did not.
I ran out of gas that morning with my baby in the car. I didn’t have a cellphone to call for help. I was rescued by a sharply dressed young man who kindly drove us to get a can of gas.
I apologized and said, “I’m so sorry to delay you, because you must be going to work.”
“It’s okay,” he said. “I’m just on my way to see my probation officer.”
Thankfully, the guy was a Good Samaritan. But things could have turned into a real-life horror show.
And yes, as my husband pointed out at the time, I could have stopped to get just a few gallons of gas.
I learned my lesson. I try not to let my tank go super low, and I’ve downloaded the GasBuddy app to track gas prices.
It’s worth considering, in the long term, purchasing a hybrid car or electric vehicle, which is not only better for the environment but also saves on fuel. Alternatively, you can avoid getting a gas guzzler and instead drive a smaller, fuel-efficient gas-powered car.
A word of caution, however. Don’t rush out to trade in a reliable car for a hybrid or EV just to save at the pump. Look at the math. Is the gas savings worth a new five-figure loan over five, six or even seven years?
3. Car prices and auto debt
Here’s another financial horror story.
A third-quarter report from Edmunds, a car shopping site, found that the average amount financed for a new car reached an all-time high of $44,664, pushing the average monthly payment to $787. An unprecedented 21.2 percent of new-car buyers signed up for monthly payments of $1,000 or more, and a record 25.5 percent are stretching loans to seven years (84 months) or longer just to manage the cost.
Because shoppers are borrowing more money over longer stretches, the average interest bill over the life of a new-car loan climbed to a whopping $9,938.
To save money when buying a new or used car, set a firm budget and consider stretching it slightly for better long-term reliability. Be flexible on vehicle brands and classes. Additionally, prearrange your financing and do the research — Edmunds, Consumer Reports, Kelley Blue Book. I use CarGurus to check pricing history to better negotiate a deal.
4. Higher mortgage rates and home costs
The 30-year fixed-rate mortgage averaged 7.32 percent as of Oct. 22, according to Freddie Mac. That’s down from the previous week’s rate of 7.4 percent, but a year ago at this time, the rate averaged 6.19 percent.
The spike in mortgage rates is scaring off folks who want to refinance, a frustration that hits close to home for me.
My two daughters — one a Gen Z and the other a millennial — purchased a home together two years ago with an adjustable-rate mortgage. They had hoped rates would drop enough to make refinancing into a fixed-rate loan worthwhile. But with borrowing costs remaining stubborn, refinancing isn’t an option right now.
Here’s yet another frightening data point beyond the monthly mortgage payment.
According to a new report by Zillow and Thumbtack, ongoing home expenses now average $1,380 a month for maintenance, property taxes and insurance.
Insurance costs have risen 54 percent over five years, in part due to intensifying extreme weather. That hike outpaces increases in maintenance (32 percent) and property taxes (19 percent), according to the analysis.
5. Holiday shopping
Sure, consumer prices are high, but what scares me is how much debt people are willing to go into for the holidays.
And it’s not entirely your fault. Holiday decorations are up before you have a chance to buy Halloween candy.
“Holiday creep” is real.
More than half of holiday shoppers, 56 percent, say the economy will limit their spending plans this year. Yet holiday spending is still projected to total $1.013 trillion, according to the National Retail Federation.
What if you made a conscious decision to spend less and prioritize experiences to give your budget a break?
Think about all the scary movies you’ve watched and how you shouted at the screen because you saw the danger coming and couldn’t understand why the characters didn’t.
Follow Michelle’s financial advice show, Dollars & Sense with Michelle Singletary, on Apple Podcasts, Spotify, YouTube or wherever you get your podcasts. Want Michelle to answer your money question on the show? Email [email protected].
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