Preparing for Christmas In October

 

I know it’s only Autumn and Christmas is about 9 weeks away, but I always like to prepare for it ahead of time. While some people look at my early prep and roll their eyes, there are others who think that by starting in October, I’m leaving it too late.

There are several reasons why I plan ahead of time for Christmas, and why I think you should too.

 

  1. First, and most importantly, you need to make sure that you have enough money for Christmas. If you have Sinking Funds (see HERE for more info on Sinking Funds) then you are more than likely safe in the knowledge that you have exactly the right amount of money for your family to celebrate Christmas. If you don’t, then by the time October rolls around, you only have 2 paydays to pay for it.

Making Christmas a Debt-Free time of year is so important, you don’t want to be paying for Christmas 2018 in December 2019! If you don’t have Sinking Funds (and even if you do!) then its not too late to write a Christmas budget, but you’ll need to keep it realistic. Maybe scale back slightly, or only buy for the children in the family, for example.

 

 

  1. It means that you have time to find bargains. You don’t have to run around a week before Christmas, paying full price for everything because you don’t have time to look for bargains, coupons, vouchers or good quality second-hand items. You’ll also have time to make any handmade gifts and change them if a mistake is made. This really does help with the budgeting aspect of Christmas, and making sure that YOU are in control of Christmas, instead of the other way around.

  1. You have time to enjoy the festive season instead of being rushed and stressed. You can relax the week before Christmas Day, because you have bought and wrapped presents, cooked food ahead of time and planned everything that needs to be done. You can enjoy spending time with your friends and family, go to festive activities, spend quality time at home, because you know everything is taken care of.

So, those are all the reasons that I think EVERYONE should prepare for Christmas as early as possible. In 2019 I’ll be preparing as early as January!

When do you prepare for Christmas?

Till next time,

Claire.

 

 

 

 

 

 

Sinking Funds- How to save for large expenses

When sticking to a budget (If you need help writing a budget, you can find that here ) my biggest priority after paying for my fixed expenses, is to contribute to my Sinking Funds (SFs). This is because SFs stop me from acquiring more debt.

In this blog post, I’m going to talk all abut SFs, what they are and how I use them.

What are Sinking Funds?

Essentially, all of the things that you expect will happen at some point, are covered with small amounts of money that you put away into an account every month.

I like to think of Sinking Funds as lifeboats on a sinking ship. All is going well, you are sailing along quite happily on your debt free journey, your budget is running smoothly, you are paying off your debts using your Debt Snowball (or Avalanche), when BAM! All of a sudden, you hit an Iceberg. That Iceberg may be a broken down car, or School Uniform costs, or whatever the case may be.

What Sinking Funds do is take away that panic of hitting the iceberg. So you aren’t left panicking about how you are going to cover that expense. In reality we know these things WILL happen at some point. Its unheard of for you to buy a car and NEVER spend a single penny on it and then sell it 10 years later. All cars need money spent on them, whether its expected or unexpected. The same goes for lots different categories.

Some examples are:

Christmas- It’s on the 25th December every year, plan for it!

Birthdays-Similar to Christmas, birthdays are

School Uniform Costs

Car Maintenance/M.O.T

Pet Expenses

Home Repairs

Clothing.

 

How to start Sinking Funds

The general rule of thumb is to work out what Sinking Funds you need, then work out how much you’ll need for each fund, divide by 12 and save that amount every month.

So, if you’ll need £250 a year for car repairs, you’ll divide that by 12 (approx.£20.80) and save that amount every month throughout the year.

Where that may not work is when you’ve only just started SFs and you have a shorter time to save for expenses. For example, it’s September and you haven’t any SF for Christmas, or is August and you haven’t any SF for School Uniform costs.

In that scenario, I would work out the BARE MINIMUM you can get away with spending for that item, and save for that first. It may mean having to scale back significantly on Christmas for example. In 2017, I only spent £250 on Christmas in total. I never thought that was possible, but I managed it. And I’m sure you could manage on an equally low budget, if push came to shove.

 

At What stage to I set up Sinking Funds?

If you are following Dave Ramsey’s Baby Steps (as I do) then you will start SFs once you are in Baby Step 2 (paying off your debt).

This is not something that you ever stop doing either, it will continue to serve you for the rest of your life.

Where do you keep your Sinking Funds?

 

It’s really up to you. I keep mine in a separate bank account, and transfer the money to them every month. I don’t have them in a high interest account, I just have them in a cash ISA that I can withdraw from quickly when I need to.

I know of some people who keep their Sinking Funds in cash in their house. If you are going to do this, I highly recommend checking with your house/contents insurance to see how much would be covered by them in the event of an emergency (fire, robbery etc).

 

I hope that helps!

Claire.