Practical Budgeting Tips

Creating an Intentional Christmas Budget -Part 4 of 4

xmas_pt4_280x500That’s a wrap (pun intended)! Christmas is behind us and we’re on to a new year. How ’d you do? Were you able to make special memories with loved ones and stick to your budget? Fight consumerism and remember Christmas is ultimately about celebrating Jesus’ birth?

As I reflect on our Christmas, we managed to stay within budget for each category. I’m sharing a picture of our budget, below, so you can be encouraged by how simple it is to track what you spend. I don’t expect you to be able to read and/or make sense of it, but hopefully it’s a helpful overview.

If you haven’t already, I encourage you to total up your spending to see how you did. Now is a great time to reflect what you’re glad you did well this Christmas and what you’d like to change. What can you do now for next year? Write down how much you spent this past Christmas and determine if you think this is a reasonable amount. Would you prefer to spend less or more next year?

Our 2017 Christmas budget totals:

budget-finish.jpg

If Christmas often catches your wallet by surprise, I recommend preparing for Christmas way in advance. We have a gifts category within our budget and intentionally add to it all year in efforts to have the balance we’d like for Christmas. We track this on our budget spreadsheet within YNAB. By the time Christmas is here, purchasing presents truly is a gift (pun intended) and not a burden.

Create a budget now and begin planning for next Christmas. Remember, Christmas is on December 25th every year. 😉

What memories do you want to make in the future and what’s preventing you from that, now?

 

You got this!

 

.Em

Practical Budgeting Tips

Creating an Intentional Christmas Budget -Part 3 of 4

How’s sticking to the budget going? How many times have you been tempted to overspend or felt pressured to buy something you didn’t plan for?

xmas_pt3_280x500_3 of 4

Last week, I gave tips on creating a Christmas budget. Be sure to check out the budget template at the bottom of last week’s post!

This week, I want to provide quick concepts to help stick to the budget when the going gets tough. Let’s get to it!

3 Tips to Stick to Your Budget:

1. Rethink Traditions and Overindulging:

How can you make current traditions more affordable? Can you exchange names vs. purchasing gifts for multiple people? Spend $0 on new decorations and use what you already have? Do you really need 6 pies for 8 people?

Got kids and can’t imagine spending less? What can you do to fill in the gap with special memories (playing games, crafts, going to festivals, driving around to find lights, etc.)? I recommend “bringing them along” and explaining why you’re spending less.

I so appreciate my parents teaching me about a budget at a young age. Some years we did less at Christmas than others. We always understood, and I have good memories of every Christmas. I think explaining to your kids why you’re changing your spending habits will help prepare them to make wise financial decisions as adults.

Here’s some ideas to rethink traditions and trim back:

  • Make lattes at home or spruce up your coffee with festive creamer.
  • Got a Christmas party to dress up for? Get creative and spend nothing or less than $10.
  • Send Christmas cards via email and/or on social media.
  • If you have young kids, re-give a gift they’ve forgotten about. Or maybe they have grandparents that will be giving them plenty. 😉
costumes and coffe
$7 Christmas costume, and enjoying homemade coffee and lattes. ❤

 

2. Renew Your Mind:

Remind yourself: “I’m doing this because _____________ …“ (I want to be free from debt; I want to create financial margin; I want to be aware of how much resources I’m spending and be a good steward).

Remember: we spend ~$1 trillion as a nation this time of year. Between commercials that compare you to your neighbor, movies that make the holidays look picture perfect, and peer pressure and comparison of others, we’ll definitely be tempted to spend a lot of money. Have a game plan and stick to what’s “healthy” for you.

Keep an eye on what you’re putting in your cart before spending. Did you budget for it? If not, what’s at the root of the purchase? Did you get caught up in the marketing to make you want it? Or is it something extra special for a loved one? Does it fit within your budget? If not, where will the money come from?

3. Avoid Credit at All Costs:

I repeat. Avoid credit at all costs (pun intended!). What gift is worth going in debt over? What could you do to give a sweet gift, or cut spending in other areas to be able to afford the gift and avoid paying high interest on debt?

 

You can do it! Stay in the fight!

Em

Practical Budgeting Tips

Creating an Intentional Christmas Budget -Part 2 of 4

OK, team, we’re on a mission. Let’s call it “operation stay out of debt and make healthy financial decisions.” 😉

Last week, I shared some statistics around increased spending for Christmas, as well as underlying principles to help you prepare and frame your perspective for this busy season. As I mentioned here, over half our country plans to take on debt this time of year, so we need a plan. xmas_pt2_280x500_preview

This week, I want to focus on a practical tips. I’m  super pumped to provide a Christmas budget template! It’s free and you don’t have to subscribe. Simply download from links at the bottom of this post (printable and excel).

Throughout the template, there’s helpful reminders to help you stick to your budget.

So, let’s get right to it!

5 Tips to Create a Budget for Christmas:

1. Determine how much you have to spend.

How much would you like to spend on Christmas this year? Are you spending beyond your means? In my opinion, you shouldn’t go beyond what’s financially wise, let alone take on debt.

If there’s a gap between what you’d like to spend and what you have, where can you save to put money towards a Christmas budget (i.e. eating out less, making coffee at home, minimizing groceries expenses, etc.)?

Pausing to make a budget and predict how much you’ll spend is a great eye-opener. You’ll realize where you’re money is going and have an opportunity to reassess.

2. List spending categories and allocate funds.

Once you have your overall budget, based on what you can afford and in alignment with your priorities, allocate to each category. If you find you’re going over, “clean up your list” and trim back.

It’s OK to spend less than you normally would on gifts and/or change traditions. We definitely did during our debt-free journey. We used the decorations we already had and used a live wreath instead of purchasing a Christmas tree. It’s been refreshing to learn how you can get creative and not feel like you’re missing out.

wreath
Drew and my first Christmas, 2 months after we got married. ❤

 

3. Think of gift ideas BEFORE shopping (this is war and you need a game plan!).

I typically shop at Marshalls/TJ Maxx because I can find something for almost everyone in the family for a great price. I also love Amazon, especially if I’m looking for something unique. The mall is fun if you want a Christmas atmosphere, but I rarely shop there because prices are higher.

4. Track how much is spent as you go.

When we were paying off our debt, we tracked everything we spent. Everything. This is so helpful in saving money, so of course I have to include it here.

We also try to avoid just getting something to check the box and have a gift for someone. Keep it simple. Keep it special.

5. Renew your mind often.

Ask yourself why sticking to a budget is important to you. When you’re tempted to overspend, is it something truly special and what’s good for you and yours, or pressure from media, family, or comparison? Have a game plan and remember it. REPEAT.

Like I mentioned last week, the US spends approximately $1 trillion on Christmas as a nation. We will be marketed to and tempted to spend above our means. Are you ready for the battle?

 

Here are the templates I put together to assist you this year (with my hubs’ help making it look nice!):

Printable PDF: Intentional_Christmas_Budget

This is great because you can carry it with you and track as you go…and it’s pretty!

XmasBudget(1)

Excel: Intentional Christmas Budget

This format has built in formulas to track your spending.

Example of budget in progress:

Screen Shot 2017-11-30 at 5.10.30 PM

 

Graphic cred:

I hope this helps you focus on the true meaning of Christmas (Jesus!) and equips you to make special memories without making financial decisions you’ll regret.

Peace and joy!

Em

 

Practical Budgeting Tips

Creating an Intentional Christmas Budget -Part 1 of 4

OK, team, we’re approaching a wonderful time of year. Lots of traditions, seasonal lattes, scarves, boots, decor, and all the feels. Christmas budget, blog

But we need to be ready. We’re going into a season where we spend approximately $1 trillion on Christmas as a nation. A nation that is in roughly $20 trillion in debt (hmmm…).

*source

We’ll be marketed to like crazy. “You’ve got to have the beautiful tree, awesome decor, gifts, and more gifts.” We’ll likely feel pressured and might get caught up in this whirlwind.

We need a game plan.

Check out these statistics on Christmas spending:

  • “In a recent survey, 56% of Americans admitted they’re planning to rack up debt this season, 16% of which expect it to take six months or more to pay off.”

 

  • “…data confirms that parents are spending an average of $422 per child on holiday gifts, with 34% of parents spending $500 or more per child.”

 

  • “An estimated 25% are taking drastic measures such as withdrawing money from their 401(k)s, dipping into their emergency savings, or taking out payday loans in order to purchase holiday gifts.”

 

  • “And while a fair number of parents understand the importance of creating a holiday budget, a good 58% of families fail to actually stick to one.”

*source

These trends are pretty crazy, right? More than half our country plans to take on debt.

Don’t get me wrong, Thanksgiving and Christmas are my favorite holidays. However, I can be disappointed when it’s all over because our culture, memories, and the Christmas movies we watch build our expectations so high it can be hard to make them a reality.

I try to battle all the pressure with thinking through what’s special to my family of two. To date, Drew and I have spent about $50-75 on each other/year, while focusing on the memories we want to make. We’ve yet to buy a Christmas tree and barely decorate, but we’ve done small things that were special to us.

These decisions were primarily made while we were paying off loans, but it’s taught us to evaluate what’s important to us and how much we want to spend based on our priorities. This year we may actually purchase a tree, but it’s been refreshing to wait and see what’s special to us versus feeling pressured to do something.

Here’s my encouragement: get ready for the battle against consumerism and the hustle and bustle that takes away from the meaning of Christmas. Start thinking about what you can afford (based on your budget) and have a game plan before you take on Amazon or the beautifully decorated malls that have spent tons to get you to spend more.

 

We’ve got to prepare and be ready to fight. Otherwise “they’ll” win.

Stay tuned for my post in 2 weeks, part 2 of this 4 part series. I’ll share practical tips around creating and sticking to a budget for Christmas.

In the meantime, think through how much you typically spend for Christmas. What can you change to avoid debt or prevent spending more than you can afford? Where can you begin saving to prepare (i.e. eating out, entertainment, clothes, etc.)?

If you have the money in your budget, what’s reasonable? Do your Christmas expectations and what you’re willing to spend align with your priorities (i.e. financial goals, vision for your life, giving)? How could you make special memories without the overload?

May we pursue true joy in Christmas this year! ❤

.Em

Practical Budgeting Tips

Should We Upgrade Our Vehicle?

For the past year or so, Drew and I have considered upgrading my 2003 Camry for a newer CRV. With other finance goals in mind, we’ve been thinking through if buying a newer vehicle is a good decision for us, currently.

Here’s some of the things we’ve worked through:   vehicle

Pros (reasons to buy a newer vehicle):

  • The excitement of a “new car” and liking the look of a CRV
  • This would be a great road trip vehicle and sweet for camping
  • I’d like to trade my car in before we have to put a lot of money into fixing it

Cons (reasons to wait):

  • Vehicles are not an investment, they only lose value
  • I primarily drive my car to and from work, park it all day, and drive home
  • Seems silly to pay ~$12k to park a car all day
  • While some days my wanting a CRV is really just because I like the look of it, many times it’s rooted in pride; pride in feeling good in what I drive, that I paid cash for a nicer vehicle, etc. (the ugly stuff in my heart)
  • We could invest the $12k-13k, instead
  • It’s currently just Drew and me, so I don’t “need” a bigger car
  • I’m hesitant to make such an expensive purchase based on “want” vs. “need,” especially in light of all the ways we could use the money
  • The Camry has been a great car and huge blessing; it’s needed minimal repairs, gets great gas mileage, and has provided sweet memories (the first car I’ve ever purchased and what we’ve had since getting married)

After thinking through the points, above, we plan to keep the Camry and hold off on upgrading. If major things begin to break, we’ll probably reconsider. Personally, I’d only be buying it for a “want” and not a “need” and, for now, it doesn’t seem best to put $12-13k into a vehicle to replace a car that’s been such a blessing.

Additionally, with us not saving for retirement or investing while we paid off our loans, our goal is to “make up for it” now by building up those accounts. We also want to pay 20% down for a home, save for vacations, and other goals.

This conclusion may change tomorrow, but it seems like the best decision for us today.

I hope this post provides encouraging perspective. Perspective to pray through the motives of our heart and use wisdom, reason, and a vision for our life, instead of just thinking about what we want. If we can pursue contentment in what we have and take captive thoughts of wanting the “next thing,” I think making wise purchases gets a whole lot easier.

You may be in a different place today where buying a newer vehicle is a good decision. In all circumstances, however, I encourage you to filter your decision(s) through similar thoughts; pursuing contentment and perspective before making the purchase, and being open to waiting if it seems best. All the while, asking God to reveal the motives of your heart (and this is so freeing! <3).

In a culture where consumerism, comparison, and discontentment run rampant, we need to be prepared to push back. Are you with me?!

Em

Practical Budgeting Tips

“Living Forward” Creating a Life Plan to Transform Your Finances

I recently started reading Living Forward by Michael Hyatt and Daniel Harkavy. The premise is creating a “life plan” based on the legacy you want to leave, along with a tactical strategy you’ll implement to pursue your vision. The author’s ask you to imagine your funeral and what would be said about you. If you don’t think where you are today will lead to the legacy you want to leave, the goals you make in between the gap are what you’ll pursue through your life plan.

living forward. blog

This concept was essentially my motivation to pay off our loans ASAP, looking into the future and making a plan to achieve the desired result.

When Drew and I got engaged, we began discussing the type of future we’d like, starting a family, personal goals, etc. We knew paying $986/month would be a hindrance, in general, and we didn’t want to live with that weight for the next 20+ years. We knew it would largely play into many decisions we would make and trap us down.

*photo credit

So we created a vision for our money (like a short-term life plan). The end goal was to pay off our debt before having kids. This led us to a goal of being debt free within 2-3 years.

We knew the starting point ($76k of debt) and where we wanted to go (debt-free within 2-3 years).

Next, similar to the advice from Living Forward, we needed to fill in the gap with a tactical plan (how we’d attempt to pay off $76k in less than 3 years).

This led to Drew researching budget tools and us using YNAB (You Need a Budget). We set a budget of what we thought was a reasonable amount of money in each category/month (food, spending, entertainment, clothes, bills, etc.) and began tracking everything we spent.

The difference between where we were and where we wanted to end up was easily measurable with this tool. The key was keeping an eye on the end goal and our progress to get there, adjusting the plan to meet the goal if we got off course. Click here to learn more about our strategy.

Where I want to focus today is encouraging you to realize where you are with your finances, determine your end goal, and create an action plan to get there. Make the action plan measurable, and view your progress often. I recommend checking your budget before you spend money, as well as your weekly and monthly progress. Believe me, you can get creative in cutting back the grocery bill if you know you have $50 remaining and a week before the month ends.

So what’s your end goal? Pick something that motivates you. Here’s some of my motivations:

  • Margin for when unexpected expenses arise, for pursuing a dream (like Drew quitting his job to pursue a career change), and to decrease worry over money (remembering, ultimately, God’s in control and my source of peace)
  • Have a savings worth 6 months of living expenses
  • Increase generosity
  • Save for retirement
  • Buy a house with a nice down payment, taking on less interest/debt
  • Pursue investments and other income streams
  • Flexibility

Another take-away from Living Forward, is to create “pull power” with the goals you set. In other words, your goal should be motivating enough to pull you through to the end.

“The lesson is simple. You get what you focus on. What we see ahead impacts the actions we take right now. How we live and lead is directly connected to what we see. What’s important is that the future be enticing enough to stay focused. We call this ‘pull power.’” -Living Forward

If we didn’t have specific goals when we started our debt-free journey, I predict we’d still have about $40k in debt. If we had passively said, “hey, I think debts bad and we should pay off our loans,” we probably would’ve put extra money left over each month towards loans. However, I anticipate it would’ve been about half as much because we’d be thinking in terms of “that’s a nice goal,” but probably not filtering our decisions through it.

What would you need to change to save ___fill in the blank___/month to hit your goal in ___fill in the blank___ time-frame? Remember your end goal often and filter spending habits through this.

Bonus: making sacrifices to pay off debt is typically a choice. Reflect on your end goal for motivation and fight against a “woe is me mindset.”

What’s the future you desire? Would love to hear your goals in the comments!

.Em ❤

 

 

Practical Budgeting Tips

How Paying Off 25% of Our Debt Cut Our Monthly Payment in Half

One of the most exciting moments in our debt free journey was paying off our first major loan of $20,000. As mentioned here, our monthly loan payment dropped from debt 25_50. blog$986/month to less than $500!! Our initial debt was $76,000, so $20,000 was just under 25% of the total. HOWEVER, notice how our monthly payment was basically cut in half. Crazy, right?! Only 25% of our debt was paid but the monthly payment dropped by 50%.

This was a huge motivation to keep going!

Prior to paying off this first major loan, we were intentional to pay the minimum payment for each loan and then place additional money towards this loan which had higher interest.

A few months after we paid it off, we decided to step out in faith and have Drew quit his job to pursue a career change. We estimated this switch would take about 6-12 months of living on my income. Had we still been paying $986/month, we probably wouldn’t have considered it.

We only paid the minimum payment for our remaining loans while living on one income. However, if you try this strategy and your income doesn’t change, this is where you can really crush your debt! Ideally,  we would’ve used the $486 we were used to paying on the $20,000 loan towards the next loan we planned to tackle. Dave Ramsey refers to this as the “snowball effect.”

Once Drew transitioned careers, exactly one year later, we continued to primarily live on one income and put one of our incomes toward the remaining debt.

I share this with you for 2 reasons:

  1. Tackling one loan at a time with the highest interest can make a huge dent in your debt. Again, paying off 25% cut our payments in half.
  2. Paying off debt and creating financial margin provides opportunities! Drew made a career change to pursue his passion and talents! He now works from home, doing his “dream job.”

Here’s my challenge for you:

  • Consider all of your debt and which one loan you can tackle.
  • Remember your “why” for motivation.
  • Determine how much money you’ll save each month once it’s paid off. Remember that number!
  • Start here and stay focused on the goal.
  • Pay that sucker off and celebrate!!
  • Keep the momentum going and tackle your next loan!

If you initially have $1,000/month in debt and pay off a loan that costs $200/month, start adding the $200 on to the next loan.

If it’s difficult to keep up with your initial “pace,” you can always loosen up your budget to help you stick with it. We definitely increased our monthly budget a little as our debt decreased and we got closer to the finish line. The important thing is to push yourself but pick a pace you can stick to!

It took us about a year of intentional, disciplined budgeting to pay off $20,000. This first year felt a little stagnant, but we kept with it. We were so relieved and motivated once it was paid off and this is really when we began to feel momentum to tackle the rest!

There were definitely waves of difficult times when we really wanted to spend more money and have more “splurges,” but I’m so glad we stuck it out in the end.

 

So there you have it. I hope this strategy encourages you to start tackling one source of debt!

What’s stopping you from pursuing a debt free life today? I’d love to know how I can help, so please comment below!

 

XoXo.

Em ❤