Reduce Debt Increase Wealth

Holiday Budget

September 19, 2021 Charles McDonald Season 2 Episode 79
Reduce Debt Increase Wealth
Holiday Budget
Show Notes Transcript

Christmas is not far off, now the time to set aside money for your Christmas shopping.

 Article Links:

 https://www.moneycrashers.com/create-holiday-budget/ By Amy Livingston

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Charles McDonald:

Hello, I'm your host, Mr. Chuck, I retired accountant turn truck driver, I reduce my debt in a relatively short period of time, debt reduction to achieve financial freedom takes commitment, confidence, determination. Holiday budget, financial planners don't miss a beat, anything that should be included in your budget. They have covered what is a holiday budget, what should be included and how to set it up within your budget is what we're going to talk about. Now this is an item that you should start saving for after the first of the year, as soon as the previous Christmas holiday season is over. You should have online on your monthly budget called Christmas budget holiday budget, whatever your name it here should be one line there. And then you need to have a sub schedule or a nother separate detailed budget for the holiday budget. And you need to stick to it. strategize your spending. I got this from an article money crushers calm, create a holiday budget. So what you do if you have a spreadsheet, on the sheet one, you should have your detailed monthly budget of everything that you're gonna be paying for every month that you perfect down and keep track of you have one line on there called holiday budget, you go to sheet two, or three, whatever. And you create a detail budget of the money you're going to be spending for the holidays, is this not buying gifts for your family members, is everything you could possibly spend during the holiday season, starting with thanksgiving, going all the way through the first of the year. So if you host a Thanksgiving dinner, the extra cost and food should be included and or beverages also, plus your Christmas spending, plus your New Year's entertainment if you go out for New Year's entertainment, and that would include all your holiday spending that you can then tally up a guesstimate of what you'd like to spend divided by 12. And get a monthly amount of money that you can set aside worked into your monthly budget so that you have it in your savings account and be in reality, it will increase your emergency fund until the time you need it. Hopefully, if you never need it at for an emergency, like to replace a new refrigerator or repair your car that's broke, maybe it broke down, then you'd have the money in your savings account to pay all these extra spending that you're gonna do for the holidays. Let's start with thanksgiving. Thanksgiving is a dinner so if you're gonna host a Thanksgiving dinner, maybe you have some decorations that you can include and your budget, the additional food now, this should be in addition to the money you spend on your weekly basis or your monthly basis and that's in your budget. The additional extra food there you're gonna buy for all the people that are going to come to the party or to the dinner plus any beverages you're gonna buy in excess of what you would normally spend. Whether it's sodas for the children, or Alcohol Beverage for the adults, whatever you do is fine. If you got to buy oil, the deep fried the chicken or had chicken the turkey, then that would be an extra expense you should be including. And of course if you buy two turkeys, maybe the first Turkey is not included. But if you buy two turkeys, or if you buy a turkey and a ham may You can include the ham. And as part of the budget. Once you get through Thanksgiving, then you have Christmas. And this is where this article I mentioned, it's a guide, I have it in my show notes, is creating a holiday budget. But spending don't stop with gifts. Holiday comes with a host of other expenses including food, entertainment, decorations, holiday travel cards and charitable giving. So he could easily spend way more than what you can afford. So if you're hoping to avoid a New Year's Day debt hangover, your best strategy is to make and stick to a holiday budget. careful planning is the key to enjoying your holiday. without waking up to cold gray overdrawn morning in January, failing to plan is planning to fail. So what's step number one, well set yourself a spending limit, you got to figure out how much you can afford to spend and total, how much total that includes everything, gifts, decorations, food, travel, charitable giving everything, then you need to, once you set a total limit, let's say it's $3,000, it says a number I picked out my head. Now you got to take that $3,000 and divide it up into a list of expenses. So one of the first things you should do is list the names of everybody gonna buy a gift for and put How much are you going to expand on that person. Once you get that done, then you move on to decorations. Travel if you got to travel, and if you take your car, if you're gonna buy extra gasoline, or if you're going to travel extra far, and you maybe need to have some maintenance fun. Throw that in there also. And list your expenses, you got gifts, you have wrapping paper and trimming, you got cards and postage, you may have food decoration, clothing, you might have to go to an office party where you need to have the appropriate clothes, travel expense, holiday activities, and charitable giving. Once you get all that figured out, you need to set priorities, because maybe your list of expenses got a little long. And if you started assigning money there, maybe you're way over your $3,000 limit. Well, this is when you come back and set priority, what's the most important thing and try to prioritize what you're going to spend your money on. And maybe then set the limits a little bit lower on those particular items. Step Four allocate funds. Now it's time for nuts and bolts. So it's basically an article if you have 30 people on your gift list, it's not reasonable for you to then a budget of $100 a person because then you're at over your $3,000 he hadn't done anything else. So Bri reasonable on everything that you do, you don't want to spend more than you can afford. So this keep that in mind. Once you get that done, you add it up. If you're over your limit, then maybe you need to air increase the limit, which is not advisable. You pick that limit for a reason. Maybe you can sell some stuff, you no longer need to get some extra cash. He can give up some indulgence, cut back a little bit, maybe review what you budget it for, say clothing. Maybe you can cut that back and shot, keep track of everything. Shop smart do as much as possible yourself and create some cheaper traditions by doing it yourself may be working from home and creating family traditions that are something you're gonna need to do anyway, but you just hadn't quite done yet. So when you end your spreadsheet and let's say you're doing your holiday budget is on page two, and you get all your numbers in there have your budget estimates, let's call it You need to put a second quarter third column in their actual spending. So as you go through and start spending money, you can put, you get the gifts purchased for the one person that's in your list, you can put the actual dollar amount that you spent. And you can go down and keep updating that. So you can see how close you are to what you budgeted. So you can keep your budget in line with what you guesstimate it. I know this episode's not coming out too late September, it's a little late. But the sooner you get started and start setting money aside, the better off you're going to be in January. Even if you know you can have all your credit cards paid off in one or two months. The idea on reducing your debt is one, quit creating new debt. Even for the holidays, you must stick to that. So let's say we were doing all this in September, you come up with your total, you need to divide that by three months, October, November, December. He may not have the money in until December. But that's okay, cuz you could buy presents later on. Maybe some of those expenses won't happen until later in the month. The idea on creating a holiday budget and keeping it strict and straight to it is to prevent yourself from creating more debt and get farther behind. I cannot stress that more you should be doing this every year, even when you have all your credit cards paid off. And you know that you can charge everything that you spend for the holidays, and you are confident you can be paid off in two or three months. If you save for it in advance, you maybe have it all paid off by the end of January, and would be a lot less stress on you and your budget. And everybody will enjoy the holidays much better. And as I was thinking about this, you should be doing something similar on sheet three, let's say for travel, you have maybe two automobiles, maybe you have three automobiles, you need to put a travel category and put in the details. Auto one auto to auto three, gas maintenance, oil changes, new tires, run major repairs, major repairs may only put $5 a month for each car, or maybe $5 a month for all three cars, you may never run into it. But if you can just slowly keep building up your savings account as something bad would happen. You'd have the money or lease part of the money available to cover that. So if you say, Okay, my first car, I drive back and forth to work, and it's $20 a week, I would be $80 a month, four weeks per month that I'm going to spend for gasoline. Then as you buy the gasoline throughout the month, you put the actual next to it. So you can see. Okay, well this week, I spent $19. Then the next week I spend $30. And then next week I spend $40. So you can continually get a better average. And keep updating your budgeted amount. So you're closer to the actual expenses that you may come up with. And you do that for all your cars. Yeah, maybe once for you, once your wife ones, maybe a child. And you can figure out and track exactly what is being spent for gas and oil changes, and maybe minor repairs, whatever you want to do. And then you total that up, divide it by 12 and come up with a monthly amount or maybe you're doing it on a monthly basis and then that amount should be four added to your actual monthly budget, under auto or transportation category, he could do the same thing. For every category, you get to have a category, utilities, then you get to have on sheet three or four. list all you utilities that you pay, and what you pay every month, and then put your actual amount you pay. So you can keep continually updating the detail, and then bringing the total over into your total monthly budget. For those of you that know how to do spreadsheets, I hope you understand what I'm saying. If you're not too good and working with spreadsheets, it can go to Google and Google I budget category, find a template that you like the most, and download it into whatever sprit spreadsheet that may be on your computer, or whatever software you may have. Google has spreadsheets, Windows and spreadsheets, Mac has a spreadsheet, everybody's got them. They're relatively inexpensive to buy the software, it may be a good investment to help you with your budgeting. And then he can maybe watch some YouTube tutorials on how to set them up. And how to put in formulas is we're not talking anything too complicated is assuming you know the adding up of a list of numbers. And then take that number and plug it carry that forward by to watch a YouTube video, that's the best way I could state on how to do it. It's not all that difficult, it may be time consuming at the beginning. But it will be worth the extra time you spend and knowing how close to your budget, you may or may not be how far off if you get out of whack with your balance, that's how you get in trouble. Because you gotta quit creating new debt, you got to pay the minimum balance on all your credit cards, you got to make all your payments on time, you got to put money into your savings account the build up an emergency fund, then once you have your emergency fund, you keep putt ng money in there until you hav a couple 1,000 ,1,500 2,000 ex ra, then you would then select a credit card, I would prefer p ying the highest interest ra e first. Once you can get that established and get a routine, you'll be surprised on how fast those credit ca ds start disappearing, then you can work on auto loans, then ou could work on your hous line of credit, and then maybe ven your first mortgage. I pai off all my debt and three yea s, eight months and it w s 120,000 or 130,000. And this is way I did it is not all th t difficult. And we can get it I'll be back in one moment was my final thought. If you l sten to this podcast reduce t at increased wealth on an pple device. Scroll through all the episodes towards the bottom And you can select write a rev ew and leave your comments and you can rate this podcast. I a preciate all feedback. And I hank you for your time an doing so. A holiday budget is mportant. If gift giving in the holidays are important for yo r family. In order to make ure you have enough money to buy the gifts Do you want to buy eve ybody and to pay for everything ithout going into debt? It's imp rtant to set up a holiday budge . I would do that on this sepa ate sheet in my spreadsheet nd bring the total up to your mo thly budget. You can use t is amount to increase your e ergency fund until which time yo need to use it to buy your gi ts and other items for the h lidays. Just make sure if an emergency happens, he have two choices. You can use that money in Set aside to hel reduce your emergency, so yo borrow less money, or you can set it aside and not use it. o it's there for the holiday . I guess it depends on how close to the holidays your emerg ncy happens. Make sure you keep track of how much your emergency fund is, and how much money that your holiday budget is and saved to the savings. Keeping rack of that is simple. Just o it in your sheet, your spre dsheet. Just post how much e ery month or every week you p t in to your holiday budget sav ngs account. Or you can set p a separate savings account ust for your holiday budgets. Ba k in the 60s and 70s, the ban s and credit unions had a Ch istmas Fund, which you set aside you put the money in you wasn t allowed to take the mone out until a certain date, usua ly somewhere in November, that ou could use to buy your Ch istmas gifts whenever you need d it for you can do that your elf. You can set up a sep rate savings account and keep t completely separate from y ur emergency fund. Or you c n combine it together in your sa ings account and keep track on it through a spreadsheet on how much of that savings is for y ur emergency fund. How much is your holiday fund? How much is m ybe for your auto repairs, or wh tever you're doing. Just keep track of it. It's important to now how much money you have and how much you have to spend on t e items that you want to spend oney on when th