How To Not Go Into Debt At Christmas

     When I was a much younger Mom, I loved going all out for my kids during the Christmas holidays - toys, clothes, experiences, good food, all the things. But usually, by the time December 25th actually rolled around, I would be a bundle of nerves. It was because I had made some financial mistakes that put my family's well-being at risk.

Back then, I didn't have a large income (still don't to this day) and planning ahead was not my strong suit. I utilized lay-away programs at stores to do the bulk of my holiday gift shopping. But that also usually meant that I ended up not paying the rent in order to make the holidays 'magical' for my kids. I'm guessing that my older children, who are all adults now, can't even remember a single gift they received before the age of ten. I was risking our home in order to over spend.

Yes, I was the problem. Because I came from a childhood of poverty, I never wanted my kids to feel like they were too 'poor' to get good stuff for the holiday. This was one of the many facets of the unhealthy relationship I had with money.

Then, one year, a friend of mine was explaining her budget to me and there was a line that stated 'Christmas Club'. Curious, I asked her what that was. She told me that it was something her mother used to do and had passed along to her. 

Christmas Club was a bank and credit union marketed special purpose savings account. Customers would deposit a set amount of money every week into a savings account, and at the end of the year, they would get the money back at the end of the year for Christmas shopping. They fell out of popularity with customers as they often offered low interest rates and high fees.

The theory of the short-term savings account was a good one though. In today's financial circles, this would be called a sinking fund.

A sinking fund is a savings account dedicated to a specific expense that you know if coming. Like holiday gift shopping or a larger purchase you want to make.

I use sinking funds to save up for all purchases that cannot be paid for in cash out of my regular bi-weekly budget. I have funds in different savings accounts for:

• Holiday spending
• Car repairs, maintenance and new tires
• Large purchases like new mattresses or appliances
• Vacations/Staycations
• Any special purchases

In my biweekly or paycheque budget, I set aside a pre-determined amount to be transferred over to the appropriate sinking fund account. When payday hits, I know how much to transfer and do this before paying bills. 

For my holiday budget, I estimate what I can reasonably afford to spend on gifts and extras - usually in the $1200 - $1500 range. I pick the higher amount as my goal, and divide by how many paycheques are between the time I start (usually in January) and the goal date (usually first week of December). It usually ends up being around 24 pay days, and I subtract a couple because, you know, life happens and I may not be able to put the money in on one or two occasions.

So, $1500/22 = $68.18 per paycheque to save. I'll either round up, or down, whichever makes the most sense, so for this example rounding up to $70 per paycheque seems about right.

If I save $70 at least 22 times, I will have $1540 in cash available for holiday spending.

What I end up doing is adding extra to it when I get any amount of money coming in that I wasn't expecting - a tax refund, a cash rebate, the Toonie I found in the parking lot. Anything that will get me to that goal faster. 

But even if I don't add anything extra throughout the year, and I am able to consistently save $70 per paycheque, I know I will have enough money by the beginning of December in order to do my holiday shopping.

Which is much smarter than not paying my rent for a month, and then taking months to catch up.

Do you use sinking funds for the holidays? Have you ever tried this method? Let me know in the comments.

Life Happens While You're Busy Living It

My husband is officially unemployed. 

We've known for months that his warehouse was closing, and the product they distributed was going elsewhere. We've had months to prepare for this. But it's still a bit of a shocker.

The end date for his employment was supposed to be October 31st. Yesterday, they started offering early release to those who showed an interest in it. My husband was the third person they spoke to. 

Hubs had been unhappy for years at his place of employment - a series of things that were unfair, and just not right. All to ensure that the company continued to make a profit. His supervisor started changing toward Hubs, and damn near became a tyrant by the end. They wanted him to quit, and they tried every method they could to get rid of him, but he never did. They tried to set him up to do something that they could fire him for, and that never worked either.

Most of his co-workers were so frustrated, they just walked away. Without the severance package, or the retention bonus, just as the company planned. My husband refused to let them have the satisfaction of him just walking away, and them not paying him. So he stayed.

Until yesterday.

It will be a couple of weeks before his severance is paid out, along with the vacation time owed to him, and that retention bonus. In about a month, he will be contacted about his group RSP and we can move those funds to our bank.

Being down to one income will likely make our budget so tight it squeaks, but we have money in our Emergency Fund to fill any little gaps that might happen. We are fortunate in that respect.

Hubs has a plan to take some down time for himself and to do some thinking on what he might want to do next. We are at an age when getting a new job could be a bit tricky because we are less than 15 years away from retirement. 

We are so fortunate to able to handle this bump in the road without much stress. In fact, him not going to the warehouse lowers his stress level. We will take this season of uncertainty in stride and put the plan we have into action.

We will get through this.

Down to one income a mere six days before our one year wedding anniversary. How interesting life can be.