Your Money: Holiday Budgets

I love the holidays. I love giving gifts. But when money is tight, I must admit that it’s not the best tie of year to be on a budget. So how do you make it through without feeling like a complete Scrooge?

Make the Cuts
The first step is to take a good hard look at your shopping list. Who do you usually buy for? It may sound heartless, but are there people you can cut out? Chances are you’re not the only one who could use a reprieve. Perhaps there are people you can talk to and arrange to not exchange gifts. Or for a group of friends, coworkers, or family members, try a Secret Santa exchange so each person only has to buy one gift, but everyone receives something. Another option — especially for families — is to only buy for the children, not all of the adults. Or plan a holiday gathering rather than gift exchange so you spend the holidays dwelling on the experiences and time together rather than the material possessions. Make it a potluck so everyone has the opportunity to contribute.

Specify a Price
Once your list has been pared down, it’s time to determine how much you’ll be spending on each person. Figure out how much you can spend overall for gifts, then break it down among the recipients. It doesn’t have to be an even split — those closest to you will likely receive the bulk of the budget. If you’re a bargain hunter, you can likely get away with spending a bit less while not looking cheap.

Stick to the Budget
The easiest way to make sure you adhere to your designated budget is to get it all in cash. When the cash is gone, you’re done. No ifs, ands, or buts. It helps you avoid the temptation of whipping out a credit card and going way over budget. To make it less messy, get an envelope for each person you’re buying for an insert their individual budget into the envelope. That way you can track how much you’re spending on each person and can make sure you’re not going over. (If you’re shopping online, it’s OK to use a card — just make sure you take the cash out of the appropriate envelopes and deposit it right into your bank account so you’re not tempted to spend more. Or, better yet, purchase a prepaid gift card or credit card with cash, and use that online.)

If you’re really not into cash, you can also use apps designed for gift giving. Browse the app store for your smartphone (or do an internet search for programs on your computer) and look for gift list tracking programs. Some will allow you to assign and track a budget for each person, or each group of people, so you can see how much you’re spending. Just don’t forget to insert all the items you purchase!

Go Shopping
Shop around before settling on a gift. Make sure you’re really thinking about what you would like to get each person. It’s easy to get into the “he would like this — but he would like this, too…and this, and this…” mentality when physically in a store. To avoid that, make a list of possible gift ideas before heading out and do some research to get a feel for how much they should cost you.

Some other tips:

• If you’re buying online, don’t forget to take into consideration the cost of shipping, if applicable. It may not be the actual cost of the gift(s), but it’s still money you’re dishing out.
• If money is really tight, avoid gift cards. They show exactly how much you spent and can make you look cheap if the amount isn’t “high enough.” Instead, look for less expensive gifts the recipient would enjoy.
• Don’t forget gift wrap. Paper and bags cost money, too, and should be considered when calculating your budget.
• When you’re out shopping, look for sales and deals to help you stay in budget. When you find a great deal, you have a couple of options: take the purchase price out of the budget for the recipient, or take the original price of the item out of the budget. If you take the original price out of the budget, you can use the difference to make up elsewhere where you may be lacking, or you can donate the difference to charity.
• Consider making items rather than purchasing them. If you’re handy, you may be able to save money and give a more meaningful gift.

The Rest of It
The holidays are not all about the gifts. There are also the food, the decorations, the cards, the parties…and these all need budgets, too. As with the gifts, figure out exactly how much you can spend, then divide up the budget among the needs. It’s all about give and take. Can you settle for last year’s decorations so you can spend a little more on that special dessert for Uncle Fred? Can you cut down a little on baking so you can afford that gorgeous wreath for your front door? Determine your priorities and plan accordingly.

Plan Ahead
To make it hurt less next year, start planning ahead now. Set up a Christmas Club or other bank account and have money automatically transferred each week so you’ll have a lump sum available when the holidays hit. Shop sales after the holidays so you can stock up on cards and gift wrap when they’re cheap. And hey, while you’re at it, pick up any great deals you find throughout the year on actual gifts — you’ll be grateful you snagged them when it’s time to figure out next year’s budget!

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Your Money: When to Spend

With all the talk about saving money and cutting back, you may find yourself thinking that spending more than the bare minimum is never a good thing. However, that’s not the case. There are many instances when spending a little — or even a lot — more makes the most sense.

When it comes to certain items, durability trumps cost. As such, when you’re shopping for something you plan on getting a lot of use out of — a car, furniture, clothes, etc. — shop by quality level, not by price tag. While spending a lot does not necessarily mean you’ll be getting the best quality, it’s not often that you’ll find the cheapest item to be, either. Do your research to determine which item will give you the most bang for your buck. Even if it’s not cheap now, it may still save you money in the long run: you won’t need to replace it as often, it will require less maintenance, and you’ll spend less time dealing with hassles. Of course if you only plan on using something a few times, by all means go cheap! And if you’re able to find a great deal on a high-quality item, don’t let a low price tag deter you.

I’m all about shopping around for the best deals. And it can be very tempting to go to a million different stores because each one has the best deal on something. But keep in mind not only the cost of your time, but also the cost of gas and wear and tear on your vehicle. It doesn’t make sense to go across town to save a little if you’re eating up the difference in gas! Weigh the pros and cons and determine what is truly the most cost effective option. You may end up spending a little more up front but saving more in the long run.

Perhaps most important of all — at least in my humble opinion — is the memory factor. Material items come and go, and any money spent on them will go as well. But memories last a lifetime, and money spent on them will, too. When it comes to experiences, vacations, events, etc., consider spending a little more. You don’t have to go all out to make great memories, but you don’t want your memories to be tainted by the fact that you were too cheap to do anything, either. Think about what you’ll really remember, and let that be your guide. The result can be the best use of your money yet.

Your Money: Building Your Savings

Having a savings account can serve many uses. It can offer a cushion by way of emergency savings. It can help you put money aside for periodic but irregular bills, such as heating oil. Or it can help you save up for an expected future expense, such as a vacation, new car, or new appliance.

If you’re like me, you probably find that money disappears way too quickly. Between bills and everyday expenses, there just doesn’t seem to be enough. So how can you have any hopes of putting some aside for long-term saving?

If money is tight, it’s not easy. But there are some steps you can take to make it a little easier. Here are some tips that can help get you started:

• Set up an automatic transfer from your checking account into a savings account. When it’s automatic, you have no choice but to put that money aside. Just make sure to record it in your checkbook so you don’t forget about it and overdraw your account!
• Instead of paying with a debit or credit card, pay cash. And only pay with bills. Whenever you get change, put it aside in a piggy bank. You’d be surprised how quickly change can add up.
• Some banks will let you set up your accounts so whenever you make a payment, the bank automatically rounds up and withdraws the whole dollar amount. The difference between the actual payment and the withdrawal amount goes into a savings account.
• When you go grocery shopping, pay with a debit card and get cash back. But instead of spending that cash, put it aside. It doesn’t have to be a lot to add up quickly.
• Set a budget for purchases such as groceries or clothes. Then, do your best to spend well under the budget. Put the difference in a savings account.

There are countless other ways to save money, and the most important part is to find something that works for you. Trial and error can help you. And you may find that you have to dip into your savings periodically if money is especially tight. Keep your eye on the long-term goal, and don’t beat yourself up over short-term setbacks. It will get easier, and saving will become second nature over time.

Your Money: Get What’s Coming to You

There is a lot of unclaimed money out there, whether it’s bank accounts that people forgot about or insurance claims that were never made or money not taken advantage of for a number of other reasons. The amounts are staggering. And if you think about it, there may be money that’s owed to you that you’ve forgotten about or never thought about claiming. Whether you’re struggling with money or not, don’t let those unclaimed funds slip through your fingers. You deserve that money!

A number of years ago I had a health savings account. Time passed, and I stopped making deposits. Eventually the bank I had the account with closed the account due to inactivity. The money that was in there (about $100) ended up getting sent to my stat’s unclaimed funds division. I eventually remembered about it and claimed the money that was rightfully mine, though the state took a cut for the trouble I put them through. If you have any accounts that may have slipped into inactivity, check with your bank or your state to see if there are funds that are owed you.

Another personal example: I had pet insurance for our dog, Oliver. The way the insurance works, I had to submit claims to get money owed me. If I didn’t make the claims, the insurance didn’t know about the expenses, and I would have paid 100% out of pocket unnecessarily. The same can be said for some health insurances. If you paid for something out of pocket that should have been covered by your insurance, submit a claim form and get that money back. Even if you have to pay a deductible or copay, getting something back is better than nothing. Just think how happy you’ll be to get that check in the mail!

Sometimes a little research can reap huge benefits. Spend some time thinking about what you should be paying and what you’ve already paid. Check out your state’s unclaimed funds division to see if your name happens to be on there (be sure to check for your spouse’s name, too!). If necessary, review your insurance policies to make sure you’ve taken advantage of everything the policies offer. There may be things that are covered that you didn’t think were. Why  miss out?

A few other ideas:

• Check with your employer’s human resources department to see if there are any benefits you’re not taking advantage of. (For example: employer match and profit sharing on 401(k) accounts, continuing education funds, etc.)
• Hire an accountant to do your income taxes to make sure you’re taking advantage of all the deductions you qualify for. Along the same lines, if you make any donations, make sure you get receipts so you can deduct them at the end of the year.
• Download apps such as ibotta and Checkout 51 that offer rebates on groceries and other purchases, and you can get cash back for purchases you’re making anyway!

Your Money: Get Out of Debt

It is one of my dreams to be clear of debt. Unfortunately, I must admit that that dream is a long way from coming true. The realities of life have set us ack.

I’m sure many of you are like us. It has become the American norm to have mountains of debt. While I can’t say I’m proud of it, I know things could be worse. At least we’re able to pay our bills each month. But if you can’t pay your bills, or you’re just really tired of those credit card bills staring you in the face each month, it’s time to do something about it.

Without having much, if any, money at the end of the month, it’s easier said than done. But I found a couple of ways to knock off little chunks of the mountain that don’t fall under the typical “save money” or “make more money” categories:

“Bonus” money:

• Did you know that if you get paid weekly, but pay your bills monthly, you actually have enough to pay 13 months’ worth of bills? Think about it: most months you’ll have 4 paychecks for the months’ expenses. But every 3 months you get a “bonus” check, giving you 5 checks for that month. If you continue to limit your expenses to 4 paychecks, that “bonus” check can be used to knock down debt. If you’re looking to pay down your mortgage, some lenders will even let you work out an arrangement to pay every 2 weeks — so you automatically pay 13 months’ worth of mortgage payments each year. That can save you tons of interest and have you owning your home free and clear a lot sooner. If you’re looking to pay off credit card debt or student loans, etc., that money can make a huge dent in your debt, saving you interest and stress.
• Along the same lines, when the time comes, you can use your tax refund money to pay down debt. Don’t get a refund at the end of the year? Consider having a little higher amount deducted from your paycheck each week. Not only will it save you the stress of having to scrounge up money to pay when tax time comes; it can also force you to save money. If you have difficulty saving money on your own, this “forced” savings plan may work out well for you.

Refinance:

• Our mortgage was locked in at 6.5%. It wasn’t a horrible rate, and compared to many others who purchased their homes years ago, I’m sure it might look pretty decent. But interest rates have plummeted. Unfortunately, so has our home’s value. At the same time, our debt-to-income ratio has gone up, making us less-than-ideal candidates for a credit review. Well, in steps the government. We are far from being the only ones in our pickle, and we were able to call our mortgage company and work out a refinancing that saved us 2.5%. That’s huge! We’re now locked in to a 4% rate, and that has saved us about $250 a month. Guess where that money could go?

Of course there are loads of other ideas out there to help you knock down your debt. In addition to finding ways to save (try Tracking Your Money) and finding ways to bring in additional income (check out Supplemental Income), you can try balance transfers to knock down high interest debt (just keep in mind you’ll need good credit, and you’ll need to be able to pay off the balance by the time the promotional period ends), asking your lenders for a lower rate (be sure to ask for someone who has authority when it comes to interest charge rate changes), and debt consolidation (research for a reputable organization and watch out for scams).

Above all, try not to get discouraged. It can be very stressful to be in over your head, but taking a deep breath and working out a plan can be the best course of action for digging yourself out.

Your Money: Supplemental Income

Your car broke down. Your child needs braces. The water heater conked out. Or maybe the debt is mounting, you want to save for a vacation, or you just want to pad your savings account. No matter the reason, you need extra money. How do you get it?

The answer is supplemental income. You aim to bring in extra money to help you meet your goals. Whether it’s a one-shot deal or an ongoing endeavor, giving your income a boost can solve your problems — at least temporarily. Supplemental income is not usually designed to be a permanent solution, but it can help get you through a rough patch.

For those who need a quick one-shot-deal, you may have the best luck by simply selling something. Have a tag sale, post an ad on craigslist or ebay, or visit a pawn shop or jewelry store. You may also find odd jobs that can help you, such as delivering phone books or helping someone with yard work.

If you have a particular skill, you can also use that to your advantage. A while back my husband and I paid someone my husband worked with to help us install our new patio. He had experience, we needed the expertise, and they were able to knock it out in a day and a half. I’m sure he appreciated the extra income, and we saved time by having someone who knew what he was doing. It was a win-win. Maybe you have experience in bookkeeping, photography, proofreading, etc. Whatever your ability, someone is probably looking to fill a need. Try posting an ad in your local newspaper or online at craigslist. You can even check out fiverr.com to get quick, low-cost jobs that can add up.

If that doesn’t pan out for you, or you prefer someone more consistent, you can also look for an additional job. You can try delivering newspapers, picking up a few hours at a local retail establishment, or scouring the job boards for a part-time job that meets your needs.

You can also heck out work-from-home opportunities, such as being an independent consultant at one of hundreds of companies, such as Avon or Mary Kay, Tupperware, Pampered Chef, Usborne Books & More, etc. Depending on your level of commitment, you can do quite well and bring in considerable income.

Possibilities are endless, and you’re sure to find something that works for you. Just remember that even if it’s an on-the-side job, legally you must claim any income you bring in.

 

 

Your Money: Gambling

Every time the jackpot gets really high, you hear it: “If I wont he lottery, I’d…” And a million people run out to buy tickets, praying and hoping that their dreams will magically come true when they win that outrageous sum of money.

It’s a great picture, isn’t it? To have all your problems disappear in an instant. Unfortunately, it’s not a very likely scenario.

I like to gamble as much as the next person. I enjoy visiting the local casinos and playing the slots. I would love it if a spin of the wheels brought up instant debt freedom. But I’m also realistic. I know that the odds of winning enough to make any kind of dent in my debt is pretty slim. Especially since I just play the penny slots! But even if I bet more, there’s no guarantee I’d walk away with anything — and a pretty good chance I’ll walk away with nothing, not even what I came with. Fun? Yes. A miracle waiting to happen? Not so much.

It’s the same, whether it’s the lottery or the casinos. It can be fun to play and imagine what you would do with your winnings. But the important thing to remember is that it is just for fun. While it’s possible you could experience a life-changing event, the odds are low. And throwing all your money at the low odd makes about as much sense as using it as fire kindling.

My point is not to give up on gambling entirely. It can be fun if you go into it not expecting anything. Consider it a form of entertainment. But if you find yourself relying on what you might win, you may have a bigger problem on your hands, especially if money is tight to begin with. Play once in a while, but for the long term it makes a lot more sense to invest that money in something that will bring you a guaranteed — or at least almost guaranteed — return. Put it in a savings account. Put it toward a high-interest debt. Start a college fund. Keep some of your money instead of throwing it all away.

Your Money: Online Help

When it comes to money, there is a plethora of information out there — both online and in real life. Online resources, in particular, can be valuable tools. They can help with both general information and specific tools such as mortgage and retirement calculators. You can even get advice when it comes to your specific needs.

General Information
The sites below can offer general information on financial topics, as well as articles on the latest money and business news. Each site offers different categories, depending on your informational needs. Keep in mind that unless you’re business- or financially-inclined, some of the terminology may be advanced, requiring additional research:

• CNN
• MSN
• AARP

The great thing about these sites is that whether you’re looking for personal finance information or information for your business’s finances, resources are available. So no matter what your goals are, you can get the help and information you need.

Calculators
Depending on your goal, you may be wondering what you have to do to meet your end result. Luckily there are many resources out there that suit exactly this purpose, whether it’s for a mortgage, retirement, auto loan or more. Click the links below for instant access:

• CNN Money’s Calculators
• Practical Money Skills’s Calculators
• Young Money’s Calculators

These are just a few — there are many other calculators out there as well. If you’re looking for a specific type of calculator, you can also search for it using your favorite search engine.

Forums
Experts and other consumers can often help with specific questions or issues. To take advantage of this, check out money forums. These can either be general forums or specific forums that deal with the area of your money life that needs guidance. Below are some general money forums to get you started. You can also search for forums regarding a specific topic by heading to your favorite search engine and searching for forum: topic. (Obviously replace “topic” with the actual topic you’re searching for!)

• Money Talk
• Get Rich Slowly

Other Resources
In addition to websites and forums, there are other electronic tools that can offer help and inspiration. You can also check out podcasts, online magazines, apps, and more. Search your favorite electronic device to get ideas.

If you don’t know where to start, or need guidance with the basics, check out my own site-in-progress All About the Money for articles and links.

Your Money: Where Does the Money Go?

Whether you’re trying to save more or looking to pay down debt, knowing where your money is going can be helpful. And I’m not just talking about bills, though that is, of course, important. I’m talking about the little things and the not-so-little things that come up on a daily or random basis.

Without knowing where your money is going, it can be difficult to make effective changes to your habits and make progress in your saving or spending goals. By tracking your expenses you can properly plan and decide where to cut back so you have extra money to apply toward your debt or save for your goals.

To track your expenses, carry a notepad with you and record any money you spend — whether it’s 75 cents in a vending machine or a shopping spree at the mall. You  may be surprised at what you spend money on and how easily it disappears. Keep the log for a week, month or longer — however long it takes you to see the pattern and find ways to cut back. Maybe your downfall is clothes. Can you spend less? Shop elsewhere? Buy one blouse instead of two? Or maybe you stop at the vending machine a few times a week. Would it make more sense to buy in bulk at the store instead and bring your own snacks? Tracking your purchases can help you pick up on these quirks and guide you in ways to save.

Once you’ve found areas to cut back, take action. When you find yourself moving to spend that money, stop yourself and earmark that money toward your goal instead. Even 75 cents a few times a week adds up. And that can make a big dent in your debt or savings goal.

If while tracking your expenses you find yourself spending on unexpected expenses such as car repair bills, consider starting an emergency fund. Put a little money aside on a regular basis so that when an unexpected bill comes up you’re ready for it. As I said above, even a small amount adds up over time. And being able to plan for the saving can help make the expense more manageable than having to deal with a several-hundred-dollar bill all of a sudden.

While you’re at it, take a look at your bills and see what you’re spending on. You may be overspending on things you don’t use. Make that money work for you instead of wasting it. Your goals may be closer than you think.

Your Money: Get the Family Onboard

If you’re married and/or have children, chances are the changes you plan on making will affect your family. This holds true no matter what you’re tackling, but when it comes to money, the effects will be even more noticeable. Therefore it’s important to make sure your spouse and children are onboard with your changes. Why? A united front is a whole lot stronger than a house divided. And together your chances of success are much higher. So how do you go about doing this?

Communication
The first thing you’ll want to do is talk to your family. Let them know about the changes you’re considering, and why you think they’re important. Let them know you want their input, and that their feedback will be taken into consideration when you’re figuring out your course of action. This gets them involved, and makes them feel like they’re part of the team, instead of outsiders just watching the game.

Opening the lines of communication can also help in that you can get valuable ideas and insight you wouldn’t normally have gotten. Looking at things from others’ points of view can help you figure out which direction will be best for all of you in the long run. And getting this feedback early on will prevent backtracking later if you discover that your decisions negatively impact those around you.

Be Specific
When talking to your family, try to be as specific as possible. Rather than speaking abstractly about cutting down spending or bringing down debt, discuss what exactly needs to change. Will you be eating out less? Spending less on clothing?

The more specific your goals, the better. Not only will it help your family understand where you’re coming from and where you’re going, it will also give you a definite course of action, with a clear understanding of what you have to do to get there. And being specific in your course of action will let your family know what they have to do to be involved in the process.

Make It Fun
Making the experience interactive can bring the family together and unite you in your goals. To do this, make charts or goal thermometers to track your progress. Celebrate with small rewards when you reach milestones. Reward family members if they have a great idea or do something that brings your goals closer.

You can also get the family involved in activities that directly affect the goal. Have everyone clear out their closets to hold a tag sale. Who will make the most? Have a contest to see who can spend the least on school supplies or clothes. Encourage family members to make gifts instead of buy them — and reinforce how much more meaningful it is, in addition to saving money.

Get Creative
Show everyone how being frugal can really be about being creative. Rather than depriving yourself, you’re just finding different ways of doing things, and different ways of getting what you need or want:

• Can’t afford that new gadget? How can you use what you have to do the same thing?
• If something goes wrong in the house, learn how to fix it instead of hiring a professional. You can learn a valuable skill and save money at the same time.
• For children, show them how they can use what they have and the free things around them to still have fun. Surf the internet to find craft ideas using household items.

Once these things become habit, you’ll see how much you’re actually learning and how much more valuable the entire experience has been. Instead of just dishing out money for something, you’re gaining skills and experiences that will last a lifetime.

Stay Positive
While it can be difficult to remain optimistic, the more hopeful and positive you can stay, the easier it will be for your family to stick with you. If you consider your actions a hardship, so will they. But if you look for the fun in it, and encourage them to do the same, then it will be easier for them to see how these changes are positive. And isn’t making your lives better what it’s all about?