Is It Too Early to Bring Up Holiday Hangovers?
This week marks six months until Christmas! While we’re newly into a maskless Minnesota summer I wanted to bring it up because I am sure it’s the last thing on your mind. Now hear me out, saving for Christmas doesn’t have to be a daunting task and this is the one holiday related activity that you won’t be called out on for starting too soon (we see you Target with your decorations in September). I’m here to show you that you can actually enjoy the holidays without January credit card guilt and I’ve even included a free tool below if you appreciate a good spreadsheet!
Christmas Is Expensive
The holidays are an expensive time of year and if you don’t have any money set aside for it, I am sure you feel the stress of your paycheck being gone before you even get it. Holiday parties, gifts for friends, family and even co-workers, all that extra booze, it adds up! According to Deloitte, in 2019 American households spent an average of $1,496 on Christmas. Even more staggering, 22% of Americans believe their spending will cause them to go into debt.
Christmas happens the same day each year, yet we are constantly running in circles trying to start saving for Christmas in November while we are still stuck paying down holiday debt in March. By saving a little bit of money year round, we can avoid debt and ensure holidays are reserved for what truly makes us happy; spiked eggnog and holiday parties!
Calculating How Much You Need to Save Each Month
When trying to determine how much you should save for Christmas, let’s first figure out what you normally spend money on. Write out a list of all things Christmas related; wrapping paper, extra tape or bows, extra groceries, gifts for your immediate family, gifts for friends and extended family, home decorations, travel, etc.
Set a spending amount for each category that is backed by some research. By that I mean look at old statements or look online to see how much items cost that you are including in your budget. For example, if you normally host a party, think of how much you might spend on food and alcohol to get an accurate estimate.
Once you get totals for each category in your mini Christmas budget, add up all the totals to get your grand total that you plan to spend on Christmas. To determine how much money you should start saving, divide that grand total number by six since we have six months until Christmas. This is the amount you should start saving each month to have Christmas fully funded without worrying about holiday debt.
Here’s a free tool, no email necessary, to get started on your holiday budget! Be sure to save a copy to your drive first to get started.
Make Sure Your Savings Aligns With Your Budget
After you do the hard work in determining how much you need to save per month to leave Christmas debt free, look at your current finances and ask yourself, can I afford to put this money aside each month?
If the answer is yes, great job, you did it, now you just have to automate the transfer to make it even easier! If the answer is no, go back and look at your mini Christmas budget. Are there some extra items in there that you can eliminate or reduce your spending on? If not, is there temporary work that you can pickup between now and then to give your income a boost?
By saving for Christmas before the holidays come around, you are allowing yourself to fully dive into boozy happy hours with coworkers and exploring the latest ice sculptures with friends and family without the holiday stress of “can we afford this?”
Every penny you save now is one less penny you are paying interest on later. Let’s bring back the most wonderful time of the year as a time that’s truly full of joy and peace.
You Should Start Saving for Vacation Now (and Here’s How)
In case you haven’t heard, the world is opening up and we are about to be released into the wild and it’s every man for himself!
Calculating the cost of flying or a good old fashioned road trip isn’t the only expense when we take a trip. In order to do everything you want during vacation, it’s important to save up some money to pay down the inevitable increased credit card bill.
Creating a vacation budget can look a few different ways depending on what you are doing, but it isn't hard! Let’s use a real example of me going to Utah for a friend’s wedding in the fall. I am creating a budget to know exactly how much I should start saving each month so that money doesn’t stop me from celebrating and having the absolute best time.
Here are the 5 areas to help you create a detailed budget that ensures you get to go on a vacation that allows you to enjoy it to the fullest!
Transportation - Decide how you will get there. For this wedding I priced out our two options, flying and a road trip. Since the flights and a rental car for a week wasn’t cheap we opted for driving but that’s not always the cheaper route.
Lodging - So many options to choose from such as hotels, AirBNBs or staying with friends. Choose your preferences and research pricing for each night you are away.
Food - This is a big one and I always like to overestimate. How much will you be spending on breakfast, lunch, dinner or snacks?
Alcohol - If you like to consume adult beverages while you're away put some money aside, alcohol isn’t cheap! Estimate the number of happy hours you might have and how often.
Extras - Will you be going on any day trips? Do you like to buy souvenirs? Do you need spending money? I added a pass to the National Parks, a wedding gift and a little bit for souvenirs. Some trips this category is a lot of money while others I am spending more time with people versus doing things that cost money.
Once you have all the areas of spending let’s calculate how much money you need to start saving to get that much closer to living that #vacationlife. So far my budget is telling me that I need $972 (or $1,944 total but Derek and I split vacation expenses). If I am leaving in 5 months, I will need to save $194 a month before we leave.
If this number is realistic then great, you did it now you just have to save! Let’s say this number was too high, I would go back in and determine what areas of spending I can reduce. Easy ones for me are breakfast (I am good with coffee and a protein bar) and maybe I spend less on dinner a few nights of the week (notice I already cut dinner out one night since we will be at the wedding).
I can also increase my income. Maybe I pick up an extra shift, reduce my spending with my personal budget or sell a few things around the house to make some extra cash to help get more money.
The reason we do this extra work for a budget is so that we can curate the vacation that we want, not one that we can afford at the time. We don’t want to have guilt on our way home or regret going all together because we made irresponsible decisions.
So I ask you, what trip do you have coming up and how much money do you need to start saving to make it the best post-COVID trip ever?
We Often Don’t Include the Most Important Things in Our Budgets
Before I started on the path to figure out my debt, I was completely in the dark about a budget. What is a budget for? Who needs a budget? What am I supposed to include in my budget? Once I have a budget, now what do I do?
I initially started with listing out all of my bills and the sort of obvious things, like groceries or restaurant spending. That made sense, right? I quickly hit a brick wall when I bought a present for a friend’s birthday, that didn’t fit into any of the categories I had listed.
So there it began. I would add categories to my budget as life happened, and I was missing a lot of things! I didn’t account for bachelorette parties, weddings, insurance premiums, attending Twins baseball games or annual events like the Minnesota State Fair.
How was I so far off? The idea of saving for these “smaller expenses” didn’t even cross my mind until they started adding up. One summer I remember being a bridesmaid in three weddings and attending 10 more, I was broke!
This is what got me looking at my calendar and creating space in my budget for the things that were already scheduled and I wanted to attend. I would quickly add up what I thought that event was going to cost to calculate how much I had to start saving with the time that I had left.
Sure spending $200 at the Minnesota State Fair wasn’t necessarily going to break the bank, I could pick up another shift at work and be fine. But when I started saving just $17 a month year around, that affected my finances so much less!
That is when buying all the beer at the fair and eating all the fried pickles, corn and donuts became really fun. Because it didn't matter if I also went out to eat that week, because I planned for this.
So I challenge you, take a look at your calendar and what can you start saving for right now? Make a list and figure out how much you should save a month. Here’s a free tool to get you started on all those categories you might be forgetting in your budget.
3 Holiday Tips to Avoid January Buyer's Remorse
Here we are, that wonderful time of year where we show love and affection by participating in our consumerist culture while worsening our own financial wellbeing.
Ok that was dramatic, but is it not true? This year has taught us that physically being with one another is not only something we crave, but it’s something we need.
Dinner parties with friends, trying something new with a spouse or connecting with loved ones at the annual holiday gathering is far superior than anything big box stores have to offer.
Black Friday this year broke records for online shopping, topping off at $9 billion. And as you might have guessed, Cyber Monday broke another record at $10.8 billion.
While I can’t stop the economy from surging during the holiday season, I can ask that we all reflect on what we are buying, why we are buying it and does anyone actually want it?
Here are three tips to keep your holiday spending under control so that you don’t start the new year with buyers remorse.
Be sure you are setting money aside. Presents, gift wrap, holiday grocery store runs, it all adds up. Create a realistic budget that you know you can follow this year and remember that your January self would appreciate little to no credit card debt. Click here to download a template to get started on your budget.
You don’t need to buy a present for everyone you have ever met. Keep your shopping list to a realistic size and only give something that you know the person truly would enjoy (hint, you don’t always have to buy something, handmade items can be just as fun)
If you are buying gifts, whether it’s with a family gift exchange or for a spouse, agree on a total dollar amount that you are comfortable spending. To help you stay on track be sure to compare prices on multiple sites and shop early for deals.
This App Will Change How You Think About Budgeting !
While I was getting out of debt I started using an app early on that I think was a total game changer. This app not only helped me stay accountable, but it took all the guessing out of “how much do I have left in groceries” or “oops I spent too much, now what?”
Drumroll please - YNAB (You Need A Budget). Yup, that’s the name of the app!
Now, there are a lot of budgeting apps and there is a chance that you might already have one. But let me tell you why this one is different and why you should think about spending the $7 a month for it.
First off, if you spend too much in a category, YNAB will turn the category red and you won’t be able to ignore the problem. It will then ask you where you want to pull money from to make things right again. When you overspend that money has to come from somewhere and YNAB has no problem holding you accountable.
The second reason I love YNAB is that it let’s you use credit cards and it’s easy! I won’t go into the details here but just know that you can still accumulate your miles while you are paying off your debt.
Lastly, it makes saving for larger items a piece of cake. Maybe you want a savings goal for a specific item, like a new coach. Or you are saving for vacation but are going to be spending money along the way. Or maybe it’s a monthly bill and you are sick of looking up how much it is each month. Yup, it’s all there, and more!
The point I want to make is to encourage you to reach out and find tools that will make things like budgeting or paying off debt easier. Don’t try to create fancy spreadsheets or processes for saving receipts that you will never use.
Why make things harder?
Let's Create a Vacation Budget!
Did you know you could create a budget for just about anything? When you sit down and do the basic (yet crucial) steps that involve creating a budget you become aware of how far (or not far) your money can get you, no matter what it is being used for.
Let's take an example that we can all relate to - vacation! Let's say you have $600 in your vacation savings account and a friend asks if you want to go to Chicago for the weekend because flights are only $100 - yep! Your hotel, for three nights, is $200 (splitting with your friend). You head to Target and buy a couple of new shirts and some toiletries, $75 (at least!).
Once you get to Chicago, you buy the 3-day train pass for $20 because your hotel isn't as close as you wanted it to be. You start figuring out that you are spending $80 a day on food, two quick meals and one sit down restaurant. By the end of the weekend you will have -$35 with the new food expenses. You still have a concert you planned on going to and a couple of local museums, so you put the rest on your credit card and will figure it out when you get home.
Well, here we are. Home with more credit card debt. This is an endless cycle that creating a quick budget could have solved. Maybe you don't run to Target the night before. Maybe you get a hotel a little further out since you will have the train pass. Maybe, you can't go?
Let's practice! Create a sample budget of a past vacation - write down all your expenses and what categories they fall in. Once you're done, use this as a template for future trips and rearrange money as needed (maybe you need less restaurant money but more flight money).