I find it humorous how every year I am surprised when the holidays roll around. Once the stores start decorating for Christmas we’re all like What?? Christmas ALREADY?? as if it isn’t the exact same day year after year.
It’s so easy to get out of control and spend more than you intend to at Christmas, isn’t it? The season of giving turns into a competition of who can spend the most, and a lot of times we end up in January with a new sweater and a very low bank account.
After a few years of stressful, penny-pinching Decembers, I now include in our monthly budget a little bit to set aside throughout the year to spend for Christmas. It has helped me enjoy this season a lot more and be more strategic in the gifts I give. (If you don’t save throughout the year, don’t panic. Here are some tips for how to pay for Christmas when you haven’t budgeted for it.)
My Christmas budget categories look like this:
Gifts for family members: We normally spend $20-40 per person (depending on the gift), so this is the largest bucket of the budget. I try to save as many gift cards and coupons to use for Christmas as well. (So far I’ve purchased three gifts this year using credit card points. Score!)
Small gifts for friends, coworkers, neighbors: I don’t give big gifts to my friends (we decided we all had too many other people to buy for!), so usually I bake bread, cookies, toffee or give a bottle of wine to local friends, coworkers or neighbors.
Decorations: Christmas tree, wreaths, lights, candles, etc. I try not to buy too many decorations, since we have collected a lot over the last years, but this is one area I always seem to buy more than I originally intend to. It’s fun having a festive home!
Christmas cards and stamps: Not everyone sends these out, but I enjoy giving (and getting!) holiday cards in the mail. I am using Minted.com this year (click on the link for $25 off your order) and plan to order a postcard so the postage costs less.
Wrapping paper: Boxes, bags, and wrapping paper are pretty cheap, but add up when you have a lot of gifts. I also try to buy wrapping paper after the holidays on discount so I won’t have to spend as much when the season approaches, but normally still have to spend money on these.
Other: We pay for these things out of our normal December budget, but you can also include an Entertaining category to your Christmas budget if you host a lot of parties or dinners, or an Entertainment category, if you intend to see the Nutcracker or A Christmas Carol, or other holiday-related events each year.
Normally I track my Christmas budget in a boring spreadsheet, with the categories, budgets and gifts I buy all listed together. A little boring, but I love my spreadsheet system.
If you’re not a big fan of Excel, I just discovered Dave Ramsey’s My Christmas Budget, an interactive site to keep track of all your expenses, itemizing it down to the person you want to buy for, decorations and charities you plan to give to. If you don’t have a system for planning a Christmas budget, I highly encourage you to use is, as it’s a lot prettier than a simple spreadsheet. :)
Do you set aside money each year for Christmas?
What other categories would you include in your budget?
Do you like to buy your presents ahead of time, or wait until the last minute?
How much do you spend per person in your family?
PS – I wasn’t paid by Dave Ramsey for promoting this, just think it’s a good tool. But Dave, we should talk.
The day before we closed on our house, I went to the bank to pick up the cashier’s check that included our down payment and any leftover closing costs that the seller wasn’t taking care of (I plan to detail all of our closing costs in a post soon. Those pesky hidden costs!).
I went to the bank on my lunch break, just a few minutes from my office. Normally the line is long and I was prepared to wait a while, but that day it was unusually quiet and I walked straight up to a teller.
“Hello, how may I help you today?”
“Could I please get a cashiers check for this amount?”
I hand her a small piece of paper with a number written. Maybe overkill, but I wasn’t about to announce to the rest of the lobby the amount I wanted to withdraw from our savings.
“Sure, just fill out this piece of paper.”
She gives me a cashier’s check withdrawal form. I fill it out with shaky hands, double checking every box, every number, every detail, and then hand it back to the teller.
After a moment, the teller hands me a check. ”Here you go, have a great day!”
She hands me a check with more numbers than I’ve ever written in my whole life. In less than five minutes I had withdrawn the money that took me years and years to save. It was almost too easy. I stared at it, partly in awe that I’m an adult with this much money to withdrawal, and partly in horror that I’m about to give all of it away.
After a good long minute, the teller asks if everything is alright.
“Oh yes, it’s fine! I just took out my life savings.”
And then I held onto that check for dear life until I gave it to the lawyer the next day.
Has anyone else experienced that paralyzing jolt of fear/excitement/anxiety when they write a huge check?
I know. I said I wouldn’t let the market pressure us… but by golly, it has.
Here’s the thing: there are murmurs that things are a’changin in the housing market. According to a lot of things I’ve read and close friends and family members I respect working in the mortgage loan industry, now is the time to buy. Especially in this area. And I know, every year has been the Year to Buy since 2008, but rates are going up. Housing rates. Interest rates. And possibly private mortgage insurance minimums.
Of course, there is no guarantee that will happen, and this is all speculation. But what if it does?
Let’s see how that may influence our home-buying process. Here are two examples for a home value at $200,000 with an excellent credit score. (This isn’t necessarily the amount we would buy, but it’s just an even number for this example.)
Scenario 1: Buy this year and put 15% down at 4% interest rate on a 30-year loan
House Value: $200,000
15% Down Payment: $30,000
Loan Amount: $170,000
Interest Rate: 4%
It’s that pesky old private mortgage insurance! If it weren’t for that I wouldn’t feel bad about putting less than 20% down. But be that as it may, Scenario 1 will still save us a little each month, and allow us to be in a house a year sooner. After two to five years we can request to take off the mortgage insurance. It may cost a few hundred dollars, but it would reduce our monthly payments to $1,028.27, which is about a $100 difference a month from Scenario 2, all because of the interest rate difference.
Let’s pretend interest rates just rise to 5% next year. If we lower Scenario 2 from 5.5% to 5% putting down 20%, the monthly payments would be $1,075.58, which is better than our Scenario 1 example, but will still be $47 higher than when the PMI is taken off.
Another thing to keep in mind is that the prices of houses may be going up. The $200,000 house on the market today could be worth $230,000 next year. So even though we are saving up 20% for a house, it may not get us as much as it could this year and we may need to wait longer to get exactly what we want with the right percentage. The hypothetical $40,000 we save for our $200k house today may only get us 15% in the location and style we want next year.
Also! The rules about PMI may be changing. Banks could start to require 25% or 30% down before the PMI is waived, which would defeat the purpose of saving 20% altogether if they happen the switch the rules on us when we were still saving.
Is this making any sense?
The point is — we want to be very smart about this big, scary decision. I don’t think that this is the year to buy for everyone, but it could be the year for us. We don’t want to be scared by the market changes and rush into a foolish decision. But at the same time, we don’t want to be so close-minded that we end up losing a good deal.
Right now we are on track to have between 10-20% saved in the next few months (depending on the price of the house), and not including our emergency fund, which we wouldn’t include in our deposit. Patience is our biggest asset in finding the perfect house for us, which is why we want to start the process sooner than when we originally planned to give us plenty of time to look for the right place. Ideally we would have 20% and avoid PMI, but we have come to terms that if it’s lower than 20%, the house is less than we can afford, makes financial sense in the long run, and meets all of our criteria, then that will be the best option for us.
So, all of this to say: We are starting the house-hunting process next month. (Eeee!) As in, get approved by the bank and start searching for real estate agents. Our apartment lease is up in October and ideally we would have a house by then, but we know that this process may take months and months to find the perfect home and want to start looking sooner than later.
What do you think about the market? Is it the right time to buy?
Would you wait until you had 20%, no matter what? Or do you think it’s worth getting a house before rates increase?
What would you do in our situation? :)
PS – Please keep in mind these are ALL speculations and hear-says on the market. I’m not a financial planner or real-estate expert. :)
J and I want to be used by God in whatever way He has for us. Right now, we feel that we are called to live and work in this area, and sometimes I wish that was different. I wish our calling was a little more… spiritual. Being in the trenches of relief and rescue in the middle of Africa sounds way more exciting than an ordinary middle-class life in the suburbs of Raleigh. There is a perception of extra special blessing and calling from God on those kinds of people, and for a long time I was jealous that my life didn’t take that direction.
But the more I read God’s word, the more I realize we are all given the same commands and the same mission. The people serving in full time ministry were not given special instructions, we are all called to serve the poor, care for orphans, and love our neighbors. Just because I have a normal 8 to 5 job doesn’t mean my role in the Body of Christ is any less valuable than those who work full time in ministry. There are plenty of orphans and neighbors in Raleigh that need some love.
We also see a great opportunity to be used in a mighty way through our finances. One of my favorite things about getting out of debt and financial secure is the ability to give. Oh my gosh I love it. Oftentimes being wealthy gets a bad rep. It sounds kind of selfish, doesn’t it? And of course it can be, but I don’t think it has to be.
Ya’ll, we have some big dreams for our money. Some simple, some practical, some crazy. Some are a little selfish, like going on trips, saving for retirement, blessing our family, etc. But most of our dreams are to bless those around us and those who do work in full-time ministry. We want to use our money for good.
For more details, or if it’s easier to read in text:
Increase the amount we save for retirement, and don’t touch it until we retire.
Give away at least 15% of our income to our church, missionaries, and local organizations. Give more if we are able!
Have a savings account to use for random acts of kindness or spontaneous needs that friends or family have.
Move to a house with a live-in basement, or create a space in our home, to provide families or couples or students free or cheap housing whenever they need it.
Continue to support our missionary friends, and take a trip to visit each around the world.
Start one or be actively involved with a local ministry that fights injustice.
Adopt a child (if God calls us to), and/or help other families afford adoption.
Have a gift drawer or closet full of treasures to bless friends and family with.
Grow a garden full of flowers and plants to fill my home and give to friends.
Have a kitchen full of fresh healthy food to feed anyone that stops by.
Save and afford to go on one missions trip a year (or every other year) as a family to teach my kids about other cultures and experiences.
Save and pay for our children’s undergraduate college education.
Pay off our house early.
Save and pay for our children’s weddings.
Bless our grandchildren with trips and gifts and memories.
Oh my word, just looking at this list fires me up. I want to be able to give generously, live fully, and invest into relationships. Of course we don’t need to be rich to do any of those things (except for maybe the trips), but it’s about choosing people and experiences over stuff. God’s kingdom over my kingdom.
At the end of my life, I don’t want to have wasted this time. I want to look at all of the resources I have — money, talents, gifts, relationships — and be satisfied with the way I used them. It reminds me of the parable Jesus tells about the servant who managed the bag of gold wisely:
“Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!” – Matthew 25:23
If I want to bless others in a big way in the future, I have to cultivate that attitude and start blessing others with the little I have today. I need to live simply. Save and stay out of debt. Be diligent and work hard at my job. Give more than what is comfortable. And invite people into the mess of my life today.
Last year I wrote a post on why I hate online shopping. Oftentimes I would come home from work to a package and feel a mixture of excitement and anxiety as I opened it up, only to be sorely disappointed when the clothes were too big, too tight, too see-through, the wrong color, or just didn’t look right. Then you’d have to make the extra trip to the store or the post office to return it, and sometimes lose your discount coupons and pay extra for shipping in the process.
I chalked this up to just plain bad luck, but I think I was just going about it the wrong way. I swore I wouldn’t shop for clothes or shoes online ever again, but I love the convenience and savings that comes with online shopping. So I’ve slowly gotten back into the game, but this time with a few rules that help me feel okay when I open my package. Here are some tips for how to work the system. :)
Shop in the store first and know your size.
I know, this kind of defeats the purpose of online shopping, but most of my bad online shopping luck has come from not knowing how the clothes run, what size fits best, and whether the materials are high quality or not. So I only buy from an online shop that have a physical store (of course, this rules out all of the online boutiques out there, but for me I’ve had too many returns to make it worth it). The stores I can order online are the Loft, Target and J.Crew. I’ve found that Gap, Old Navy and Banana sizes vary based on the outfit, so unless there’s a specific item I have tried on, I usually stick to the store only.
Make a wishlist of items, and stalk them online.
When I go to stores, I like to try on different pants, sweaters, shoes, make a mental note (or save it in my Pinterest wish list) and wait for that bad boy to go on sale. It takes a lot of patience, and it doesn’t work well for must-have items (like a dress for a wedding), but for basics and everyday clothes, I’ve saved so much money. I do this a lot with Target, especially since they offer free shipping and 5% off the purchase to anyone that has their credit or debit card.
Get promotional retail emails.
Almost every retailer has daily email alerts for sales and discounts. One email service I use is Shop it to Me. You can customize it with your favorite stores, types of style, or outfits, and every week (or day) you get a consolidated email of all the deals and sales going on. Now, you have to be careful, especially if you’re easily tempted by good deals, because it may cost you more money than save, but if you select stores you know you will shop then it can certainly help.
Look for discounts and coupon codes.
A lot of times it is cheaper to order online because of discounts codes you can apply to your order, so look on those sites for any codes before you hit that Complete Order button. One of my favorites is Save1.com. I like it because it saves you money (duh), but also because it has a great mission. For ever code that you use, a portion of their commission goes to feed a hungry child through one of their feeding partners. How awesome is that?
Don’t buy final sale and know the return policy.
Don’t buy anything that’s final sale, unless you know absolutely without-a-doubt that it will fit. I have had too many mistake purchases, and it’s not worth it. Similarly, always know the return policy. Can you return it in the store? How long do you have before it can be returned? What is their exchange policy? Do you need to receipt to return it?
What are your go-to online shopping sites? Have you had a lot of bad luck ordering from online-only sites? What tips do you have for shopping online?
2013, you are flying by so fast. I can’t believe a quarter of the year is already over! Since I don’t share my budget numbers on here any more, I thought I’d share percentages of where our money went in January, February and March.
Saving: 33% Wow… I didn’t realize so much of our budget was going towards savings. I mean, I did because every month we painfully automatically transfer a large portion with each paycheck, but it seems bigger when you look at this pie. This savings amount includes a tiny bit to our Roth IRAs, another little chunk goes towards our car fund (to save for insurance, taxes, and repairs), and then the rest is thrown at our money market where we are saving hard-core for a home deposit. Slow and steady, slow and steady.
I am learning that this quiet, simple time of our life is very sweet. We are both working, healthy, have very little expenses, zero debt, and pretty low-maintenance lifestyles. I know this won’t always be the case, so I’m thankful for the chance to save as much as we can.
Home: 19% Our rent, water, trash, and any home improvement items like a new vase or decorations for the home. I think I should reorganize that last category to shopping since it is home improvement, but certainly not necessary “home” items
Food & Dining: 13%
We combine our grocery, restaurant, fast-food, and toiletries categories into one “Food” budget. I am actually surprised this percentage isn’t higher since we were over budget in this category two of the three months.
Auto: 8% During the past three months, we spent the majority in this category on gasoline, our auto insurance (which we pay every 6 months), a light bulb for the front light of my car, and my yearly car wash (to get rid of the salt under my car from snow storms).
Bills & Utilities: 5% There wasn’t anything unusual about this category, it includes mobile phone, internet, electric, and Netflix bills. Except for electric, the amounts in this category stay the same each month.
This is basically my “everything else” category. The past three months we bought work clothes, hockey tickets, craft supplies, electronics, books… you name it.