Monday, December 26, 2011

Budgeting after the holidays

So you’ve blown your budget on Christmas presents, and after playing Santa it’s time to pay the piper.

One of the most popular New Year’s resolutions, after dieting, is budgeting. Once you start receiving the bills in January, you’ll have to trim the fat from your spending.

You need a two-mode attack plan: Knock out what you spent this past Christmas and make sure you don’t overspend this coming year.

Payoff plan
Don’t just pay the minimum on those credit card bills. Have you learned nothing from The Easy Budget? Pay as much extra as you can afford every pay period to get them down.

If you’re using a budget plan, such as The Easy Budget, you would take this money out of one of your budget categories like Debt. If that category is already being used up to pay off other debts you’ll have to dip into another category, such as Entertainment, Miscellaneous, or something else. Then you’ll just have to live lean in that category until you pay off your Christmas shopping bills.

Savings plan
Once you’ve paid off last Christmas’ bills it’s time to make sure you don’t repeat past mistakes. Remember the old Christmas clubs from days of yore? Create your own.

Many banks, such as ING, allow you to easily create sub-accounts that you can name anything you like. If yours does, just give one the name “Christmas Club” and sock away a certain amount each pay period so you’ll have enough to buy next Christmas’ gifts. That way you won’t go into debt.

If you can’t easily make a special account through your bank, put the money in your regular savings account and keep up with how much of it is your Christmas fund.

How do you know how much you’ll need? Just look at last Christmas’ bills. Once you done that, take the number of pay periods between now and next Christmas and divide the amount you intend to spend by the number of pay periods and you’ve got the amount you need to sock away each pay period.

Buy throughout the year
Stores don’t run sales only on Black Friday, Cyber Monday and the day after Christmas; they run sales throughout the year. If you see something on sale in May that would be a perfect gift for someone on your list, buy it. Then save it for Christmas. My wife did that very thing for me this Christmas. And I did it for her on our first anniversary.

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Photo: Library of Congress, Prints & Photographs Division, FSA-OWI Collection, [reproduction number,  LC-USF34-082017-E DLC (b&w film nitrate neg.)]

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