Suze Orman Warns One Holiday Mistake Could Wipe Out a Year of Savings

Suze Orman spent years watching clients do the hard part. In the Classic Suze School: The Dollar of the Decades episode of her Women & Money podcast, a replay of an earlier show, she describes clients who “would spend all year to get out of $700 of debt or to save just $1,000.” Then came the part that undid them:

“December would come and the holidays would come, and before you know it, the temptation was so strong that people would spend that money all over again just to please their relatives, their children, everybody. This is not to happen to you this year.”

If you are at or near retirement, you don’t have many Decembers left to recover from a bad one. A holiday splurge can wipe out a year of progress, and if it goes on a card, you pay interest on top of that.

Orman Is Right, and the Math Is Worse Than She Lets On

Her warning holds up, and it actually understates the damage. The U.S. personal savings rate fell to 3.8% in September. In January it was 5.6%. Households are already putting less aside as the holidays approach.

Now turn that rate into dollars. Per-capita disposable income is $70,792. At a 3.8% savings rate, that works out to about $2,690 saved per person over a full year. Gifts, travel, and a few hosted dinners can reach that number quickly.

Use Orman’s own clients as the test case: a year of paying down debt and saving. Say December puts that $1,700 of progress right back on a credit card. Card APRs now average 21%, which the Federal Reserve’s data places in record territory. That rate costs about $30 of interest in the first month alone.

Pay $50 a month, and it takes about 52 months to clear the balance. Total interest comes to roughly $920. So the gifts end up costing more than half again their sticker price, and you are still paying for them more than four years later.

Compare that with directing the same $1,700 to a Roth IRA. Assuming a sample 6% annual return, it grows to about $3,044 in 10 years, and qualified withdrawals come out tax-free. One path leaves you with roughly $3,000 of retirement money. The other leaves you with nearly $1,000 of interest paid to a bank.

One Question Decides the Cost: Does the Balance Survive January?

Card spending only gets expensive when you carry it. If you pay the full statement balance by the due date, the grace period means you pay no interest. Your holiday spending then comes straight out of your budget, and the card processes it.

Once you carry a balance, your monthly payment drives everything. At $150 a month, you pay off the same balance in about 13 months, with around $214 in interest. Those are the same gifts as the $50-a-month path above. The only difference is how long you take to pay them off.

Plenty of people are already behind. The share of card balances at least 30 days past due has reached 3%, a level that has been normalizing. A January balance you can’t pay off is how people end up in that group.

How to Keep December From Undoing Your Year

1. Set one number before Thanksgiving. Make your holiday budget the amount you can pay off in full on the January statement, and not a dollar more. Divide it by person before you shop so each gift has a limit.
2. Tell family early. Orman said people overspend to please relatives and children. Telling them in November that you’re keeping gifts modest this year takes the pressure off before the season starts. Offering an experience or a shared meal instead of a pile of gifts keeps the tradition without the debt.
3. Use a payment method that can’t run up a balance. Pay with cash or debit, or pay off the card every week in December so a balance never builds up.
4. Direct what you didn’t spend somewhere useful. The 2026 IRA contribution limit is $7,500, or $8,600 if you’re 50 or older. You can make 2026 contributions until the April 2027 tax deadline, so money you keep in December can still count for this year.
5. If you already carry debt, pay it down first. Put any leftover gift money on the card with the highest APR. Every dollar you pay off at 21% earns you a guaranteed 21%, and no market investment can promise that.

Orman boils it down to one rule: “You have got to count every dollar, and you have got to make every dollar count.” Set your holiday budget at what you can pay off in January, and this December won’t erase the year’s savings.

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