Thursday, November 13, 2008

Christmas Budgeting - Getting Through the Holidays Without Overspending

Once upon a time (in what seems like) a land far, far away, I used to get regular profit sharing checks. Not only did I get regular profit sharing checks, I also got sweet Christmas bonuses. Ah, those were happy days! Anyway... there was only one problem with the Christmas bonuses - they were always paid out the same day we got profit sharing - the 15th of the month. This made Christmas shopping a bit tricky since I couldn't very well wait until 10 days before Christmas to start shopping! So what I would do every year was put everything on my credit card with the full intention of paying it off with my bonus check. Somehow it never worked out that way though. Sometimes I would get that lovely check (which was directly deposited into my checking account) and find myself spending it PLUS putting gifts on the old credit card. Other times I would slip on my budget and spend more than my bonus and not realize it until it was too late. The worst thing that I did though, was occasionally only pay off part of the credit card debt, because I wanted to keep part of the bonus as cash. All the way around, it was a dumb system.

One February a couple of years ago I was sitting head in hand, looking at my credit card statement and feeling rotten. That was when I decided it was time for me to make a change. I couldn't keep going on this way. My banking account lets you create as many little sub savings accounts as you want and you can create auto transfers to regularly divert money into them. That was the year I created my own "Christmas Club." It worked out great! Money went into the account all year long, a little at a time on a regular basis, and because it wasn't in my checking account, I pretty much forgot about it... until November when I had my Christmas money all set aside and ready to go! The plan worked so well, and was so easy, I decided to do it every year.

So, what about this year?

This year, I haven't changed a thing. Okay - I did change one thing, I moved my Christmas dough out of that non-interest earning savings account and into my interest paying online account, but that was it. So, sitting right now in my account is all the Christmas cash I will need, and it really doesn't matter one whit whether I get a Christmas bonus or not this year (though I would really, really like one, Santa.) Now, I realize that instead of putting my funds in my savings account, I could have put them towards my $900 and believe me, if it had come to it, I would have pulled that money if I needed to. I hope, however, to never need to.

A little back story here on how I came up with the $900 a month figure: when the divorce agreement was settled and it became clear that the house wasn't going to sell and I was going to be taking it over, one of the first things I did was create a new budget. On one side I listed my monthly income from my day to day job plus the income I would receive from the tenant. (The house has a one bedroom apartment in it that is rented through April.) One the other side I listed all my current bills as well as money I set aside each month for things like Christmas money and car insurance. I also estimated what bills I would have for the house (electricity, gas, mortgage) based on a 10 month average. When I was done, I totaled it all up, and was $900 smackaroos short - hence the beginning of this blog. Over the past five months I have been able to make it. I am bringing in extra income, making huge strides in savings and just overall being very frugal. Some months have been spectacular, some have sucked, but I have been able to make all my bills on time and still save money.

That doesn't mean I will go wild this year! Already I am planning on making a some gifts (which I wish I could tell you about but some of the people receiving them read this blog*) and my sister gave me her list yesterday which means I have time to score some bargains. I am still going to be a frugal shopper, of course, but I love knowing that I don't have to worry about the holidays this year.

Speaking of frugal shopping, Frugal Chick has a neat post today about inexpensive ways to decorate for the holidays - check it out!

Fabulous photo by: Possum1500

*Yeah, you know who you are!

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