Create a Christmas budget or add a line item for holiday-spending to your normal budget

This holiday season, actually think about how much money you want to spend. Use whatever method makes the most sense for you:

• Decide on a base amount for your total Christmas shopping (i.e. $500 total)
• Set individual spending amounts for each person on your gift list

Whichever method you choose, you need to add that final figure to your budget and track your spending. We don’t make a separate Christmas budget because we usually shop for gifts throughout the year (more on that later).

If you don’t have a budget already, you should create one.

Dannie made these awesome printables to help you figure out your Christmas budget. Make sure you go and download them from our free resource library!

Start saving in advance

Christmas is always on December 25th. Therefore, you can start putting money aside for your Christmas budget at the beginning of the year. The easiest way to accomplish this is by using a sinking fund.

Example: If you plan to spend $500 on gifts and you have 10 months to save, that means you should save $50 each month to have enough money for your holiday spending.

It sounds like a simple suggestion, but it could make all the difference.

Go deal hunting!

If you’ve been around here for long, you know we don’t like to buy things at full price. The same goes for Christmas shopping. Different deals happen all throughout the year but you have to be diligent about seeking them out.

We like to do all of our shopping throughout the year because we typically get better deals before the holiday rush. Plus, we aren’t stuck out in the stores with hoards of people doing their last-minute shopping.

Take advantage of monthly sales or use deal-hunting sites like Ebates or Ibotta. Make sure you’re checking your mailbox for the different coupons that get sent out as well! If you are an impulse spender, you’ll have to be mindful of what your triggers are when it comes to deal alerts via email or apps.

What about layaway?

If you don’t have Christmas gift money yet, you may ask yourself, “Should I put my gifts on layaway?” Depending on your situation, putting things on layaway could be an okay option. If you aren’t charge any interest or extra fees, go for it!

The layaway process works like this:

• Choose an item
• Pay a down payment
• Make monthly payments until the item is paid off.
• The store holds on to the item until it’s paid in full and if you cancel your payments for any reason, they’ll just refund your payments (minus the down payment).

You can read more about layaway on Walmart’s website.

Plan to have a debt-free Christmas

Do not wake up on December 26th with a boatload of debt you can’t pay off! Christmas gifts aren’t worth going into debt over. Your friends and family, should be understanding of your financial situation and not pressure you into spending more than you can afford.

If you’re going to use credit cards, we suggest making a budget first and paying the cards off before the end of the month.

That’s how we normally budget throughout the year and we don’t change that tactic when the holiday comes. Our Christmas budget gets added to our regular budget, so anything that goes onto our credit cards gets paid off before any interest is charged.

If you don’t think you can handle this, you should leave your credit cards at home and only carry cash/debit to the stores when you shop!

Make a list. Check it twice!

Saving money throughout the year and planning your holiday budget will do you no good if you overspend once you actually start Christmas shopping. The easiest way you can avoid this is by making a list beforehand.

Write down all of the holiday related items you plan to buy and then stick to it once you start shopping (the printables help with this). It’s easy to get side-tracked and just start throwing things into your cart. Sticking to a list will help keep you in check!

***
Your Christmas budget doesn’t need to be complicated, it just needs to work within your means. Hopefully, this guide will make holiday spending easier for you this year!

Was this post helpful for you? Let us know in the comments below!

$tay Wealthy fam,
— DJ

I used to get REALLY excited about tax season in the past. I thought getting a tax refund was a normal part of the process. And while I’m being honest, I can tell you that money was NOT always spent wisely (mainly because I had problems with impulse spending).

These days, we don’t even get a refund. We changed our deductions to the point where we pay “just enough” in taxes and nothing more. In essence, a tax refund is just an interest-free loan to the government at the end of the day. We’d rather have access to that money throughout the year so it can be put to better use. 🤷🏽‍♂️

1. Start or bulk up your emergency fund

We are always talking about the benefits of having an adequate emergency fund squirreled away. When your refund check arrives or gets deposited into your account, this is a great opportunity to get your emergency fund built up to the size that you need.

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A post shared by DJ & Dannie – Debt Free (@penniestowealth) on Jan 5, 2019 at 1:30pm PST

Whereas it might normally take you a few months to build up your emergency fund, your refund check could potentially help you knock this out all at one time.

2. Pay extra on your debt

Paying off debt is a great way to put yourself in a position of financial freedom. We recently became debt free and we want other people to know that feeling as well.

I know, it’s tempting to go out and spend your tax money on things you haven’t been able to afford all year. But, you have to think about it like this:

The check you’re getting is just YOUR money that you missed out on this year – it is NOT extra money!

Use it to accomplish your goals instead of wasting it on stuff you don’t even need. Because guess what – after you spend your refund on that purse/Playstation/car/or whatever random thing – your debt will still be right there waiting for you!

3. Buy life insurance

This is actually something that is on our agenda to accomplish in the very near future. I have been very candid about the fact that my mother passed away with no life insurance in place. Right now, Dannie and I have life insurance policies offered through our jobs, but we both want to take out additional policies.

But DJ, why do you guys want more life insurance coverage?

The fact of the matter is, if one of us was to (heaven forbid) lose our job – that life insurance policy goes away right along with it. That’s the situation that caused my mom to wind up with no coverage and it’s something that can happen to anyone if you aren’t careful.

Do everyone a favor and put part of your refund check towards the premiums for a good term life insurance policy. If you have a family that depends on your income, you need to make sure that they are taken care of in the unlikely and unfortunate event that something happens to you.

4. Contribute to a Roth IRA

One side effect of becoming financially stable is that you start caring more about your future self. Some financial gurus will tell you that you don’t need to worry about investing at all if you still have debt left to payoff.

Sure, you can absolutely take that route if you want to. Something we considered in our journey is that compound interest is your best friend, but it’s an even better friend if you take advantage of it early. Our investment strategy has been pretty simple so far, but you can figure out what works for you.

You can open an Individual Retirement Account pretty easily and contribute up to $6,000 into it this year. We have our accounts with Vanguard, but there are plenty of other options out there to choose from as well.

5. Invest in yourself

Last on the list, but certainly not least, is the option of investing in yourself! If you are expecting to receive any money after filing your tax return, this might be a good time to finally buy a quality spreadsheet to help you manage your budget, take some online courses to learn a new skill, start a FlexJobs subscription in order to find your next career, or even grab some of those financial/personal development books you’ve been dying to read.

Whatever the case, an investment in yourself is always a good thing. And, in case you were wondering:

The answer is No. “Treating yo’self” is not the same as investing in yourself!

***

Alright folks, that’s the end of my list. What are you actually planning to do with your tax refunds this year? Are you even getting one? Let us know your thoughts in the comments below!

— $tay Wealth Friend!

You may not believe it, but years ago, I learned a valuable lesson about impulse spending myself:

Do. Not. Do. It.

My Mistake

In the first year of our marriage, I bought a flat screen TV while Dannie was out of town for work. 🤦🏽‍♂️

You might be wondering, “Why is that such a big deal?”

Well, it’s a big deal because it was the definition of an impulse buy. We already had a TV for our house and hadn’t even discussed buying another one. I just happened to be in a store looking for something else when a TV caught my eye as I walked by the electronics section.

I justified the purchase by convincing myself that we needed this TV.

“Our TV is only 32 inches…”

“This TV is HD!”

“Ooooh, AND it’s a Samsung!!”

What was I thinking?

Literally, NONE of these were good reasons to buy a $500+ TV on a whim. I found this out a little later when I got the chance to talk to Dannie on the phone.

While I was rambling on and on in excitement about “our” new TV, I couldn’t help but notice that the other side of the call was pretty quiet.

Until…

“Wait… YOU DID WHAT?!”

I could literally feel the flames coming through the phone line!!! 🔥🔥🔥 In hindsight, my naivety of how bad that purchase was says a lot about my mindset surrounding money at the time.

This was just one purchase but it highlighted a few big mistakes because of the fact that I:

• Put a $500 non-essential purchase on a credit card
• Didn’t discuss the purchase with my partner first
• Didn’t shop around for the best deal before making a major purchase

In other words, I was:

• Stupid
• Stupid
• Stupid

Afterward, I realized that these are all huge No-Nos if you want to keep your marriage in good standing. Especially since fights about money are one of the leading causes of divorce in America.

This led us to eventually include “blow money” in our budget. We also created a rule that any purchases exceeding $100 would have to be discussed and agreed on before any money is spent.

Do you struggle with impulse spending?

You’d be surprised at how common it is for people to go out to a store for one thing and then return with waaay more than they planned on purchasing. Or better yet, making excuses for why you should buy certain things even when you know that you have other more important things to pay for.

The definition of impulse buying is actually tied to our emotions. How you’re feeling at the exact moment you see a particular item in a store can be a huge influencer of whether or not you decide to buy it.

Feeling sad? Maybe buying this thing will make you feel better.

Feeling happy? Maybe you deserve to buy that thing you just saw.

See how dangerous this can be?

Here are just a few things you can do to try and change this habit:

Only carry cash

When you carry cash, you’re less likely to overspend because you can’t physically spend more cash than you’re actually carrying. This method is tried and true (for obvious reasons) and works really well for most people.

I say ‘most’ people because we ended up ditching cash and using a digital envelope method to basically do the same thing. Your results may vary but it’s an option to consider!

Create & follow an actual budget

I can’t stress this tip enough. If you aren’t using some type of budget already, you are essentially saying:

“I don’t know where my money is going and I don’t really care.”

Please, don’t live like this. Creating a budget helped us stop living paycheck to paycheck and eventually led us to debt freedom. It holds you accountable and shows you where you’re overspending so that you can make adjustments.

Truth be told, the real danger of impulse spending is found in all of those small purchases we tend to ignore. Those cups of coffee on the way to work each morning and going out for lunch every day can really start to add up if you aren’t paying attention. We figured this out when we actually started tracking EVERY SINGLE PURCHASE we made throughout the month.

Also, when you have your categories set and you are determined to stick to them, you’ll find that your urge to spend extra money is greatly reduced because “It’s not in my budget” will be your new favorite phrase!

Weigh the opportunity costs

Something that really helps me save money these days is putting everything in terms of how much sushi I can buy if I don’t impulsively spend money.

For example, impulse buying a new video game for $60 is going to cost me two nights of sushi eating.

I’d rather have the sushi (if it’s in the budget, of course)…

Use whatever calculation you can as long as it makes an impact on your decision:

• 12 hours of your work salary
• 1 year of retirement
• 2 car payments
• 3 months added to however long it’ll take you to become debt free

Always have a plan for your purchases before you go out

If you know you have a problem with impulse buying, you can avoid shopping stores altogether or do yourself a favor and carry a list whenever you go shopping.

It seems like a simple idea, but you really feel a tremendous power when you go out shopping armed with your list. You know exactly what you need and it’s a lot easier to avoid getting anything that isn’t part of the plan.

Sleep on it

If you see something you really want while you’re out, take a picture of it and go home. Put a reminder in your phone to research the item later and then revisit the idea of buying whatever it is after you’ve had ample time to think about it.

 

 

 

 

 

 

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A post shared by DJ & Dannie – Debt Free (@penniestowealth) on Jun 8, 2018 at 5:45am PDT

Usually, once you’ve put a few nights of sleep between seeing an item and buying it you’ll drastically reduce the chances that you’ll even buy it.

***

These days I don’t have any issues with impulse spending. That doesn’t mean I don’t feel the urge every now and then, but I am definitely better equipped to fight off those feelings and keep my money in my pocket!

I’m certain that I probably left off plenty of other useful tricks for ending the impulse buying cycle. What things have you done to stop buying on a whim? We’d love to hear from you in the comments below.

— $tay Wealthy Friends!

Dannie just accepted a full-time position in the tech field last week. She felt like she wasn’t really being challenged enough lately and honestly, she missed those consistent direct deposits 😂! I know she enjoyed creating her own schedule but she is skilled enough to make waaay more money in a traditional job (it’s a fully remote position so she’ll still have some flexibility built in).

With her new job starting in January and the raises and promotion coming my way in 2019, we’ll be able to reignite our financial journey and begin working towards FI/RE (financial independence/retiring early).

A lot of people have asked us what we do to prepare financially for each new year so we wanted to share our process:

1. Figure out your total income earned in the CURRENT year

We track our individual incomes in our budgeting spreadsheet each month so we can easily calculate this number. If you haven’t been tracking your income anywhere, you can also use your W2s (if they’re already available), add up all of your paystubs or log into your bank account and add up all of your direct deposits.

2. Calculate total expenses paid in the CURRENT year

Again, we use our budgeting spreadsheet for tracking this information. We can see the exact amount we spent on any individual category throughout the year as well as the total amounts for certain categories (fixed expenses, variable expenses, savings, etc.).

3. Estimate NEXT YEAR’S income

To start planning your finances for the new year, you’ll use the income you calculated in step one (total & monthly averages) to project what you’ll potentially make in the following year.

Take that number and add any additional pay you expect to receive:

• Pay Raises
• Bonuses
• Commissions
• Overtime
• Additional jobs/side-hustles

This should give you an idea of what to expect in the new year. Any significant increases will help you decide how you’ll accomplish any financial goals you may have.

Planning it out in advance helps you make smart decisions about how you’ll allocate your money going forward. That way, you won’t find yourself increasing your spending to match your increased income.

4. Estimate NEXT YEAR’S expenses by using the CURRENT year’s expenses as a guide

Use your expenses from the current year to estimate your expenses for the following year. Most things will probably stay the same but this is a good opportunity to figure out if any changes need to be made.

Will you be moving and paying a different amount for rent and utilities?

Did you spend way less on groceries during the year than you budgeted for?

This is the time to make necessary adjustments to see what might work in the new year.

5. Make a plan for your savings goals (vacations, special events, holidays)

We make some type of list with our goals for the following year for two reasons:

1. It helps keep us motivated and gives a way to hold ourselves accountable
2. We enjoy the feeling of crossing things off of our lists when they’re done 🤷🏽‍♂️

You need to incorporate a certain amount of intentionality for your savings goals. Instead of letting things sneak up and surprise you, plan for them in advance.

Want to take a vacation? SAVE FOR IT.

Want to go to special conferences and events during the year? SAVE FOR THEM.

Whatever it is, create some type of line item in your budget and save money towards that goal each month until you’re done.

The rule of thumb to remember is:

The earlier you start…the BETTER!

6. Fill out your January budgeting spreadsheet

You should have noticed that we are huge fans of budgeting spreadsheets. If you don’t already have one, you NEED to get one. We like them because they give you a way of clearly making a plan for your money.

Not only that, but they also serve as documentation you can refer back to for years to come. (We still have spreadsheets going all the way back to 2014!)

Put all of the numbers you’ve calculated during this process into your budgeting spreadsheet and see if there are any further changes to be made. Tweak it until you’re satisfied and then…

7. Step into the New Year with confidence!!!

Once you reach this step, you’re ready to bring in the new year with a renewed sense of confidence because you know your money will be on point!

***

We’ve been going through this process over the years and I can honestly say that it has been crucial for our financial success so far. Doing things this way has helped us escape the paycheck to paycheck cycle and also helped us become debt free.

I sincerely hope that this helps you prepare financially for the new year as well!

$tay Wealthy Friends,

— DJ