with Dave Ramsey
"Silver bells . . . silver bells . . . soon it will be Christmas day." Remember that old tune by Bing Crosby? Well, the Christmas season is just around the corner.
Okay, maybe it’s not soon, but it’s coming—and we’re going to talk about it. Too many people wait until December to buy gifts. With no money saved, they turn to credit cards in a panic and end up paying for Christmas until April. Not good.
It’s much easier to get ready for the yuletide season little by little. You just need to know where to start. Here are five ways you can get a jump on Christmas.
Set Your Spending Goals NowTake a look at how much you spent on Christmas gifts last year. Where did you overspend? Where can you cut back this year? Make a gift-giving goal amount and stick to it!
Once you’ve determined the total you want to spend on Christmas gifts, divide it by the number of months left until Christmas. In December, your Christmas savings will be fully funded and you can enjoy the season instead of feeling pinched for extra money.
Now’s also a good time to decide what charities you will give to this Christmas season. Be sure to budget for that throughout the next couple months instead of waiting until December. Don’t feel bad if money is tight and you won’t be able to give like you wish you were able to. Remember, volunteering your time is just as important—and sometimes even more effective than giving money.
A great way to gather cash quickly for your Christmas savings is to use your "under budget" cash. When you come in under budget on monthly expenses like groceries or clothing, take the difference and stash it away in your Christmas savings. That $20 here and $50 there can add up in a flash. Plus, it gives you one more reason to look for bargains.
Look for Deals NowThere are plenty of end-of-summer sales going on right now. You never know what you might find after a little digging. Sift through the back-to-school clearances and you might just score some great finds for Christmas gifts too! Colored pencils, crayons and markers can make great stocking stuffers for the crafty person on your list. Plus, laptops, camping gear, luggage, towels and more are typically on sale now. Keep your eyes peeled for those deals!
Don’t forget to create a spending cap—especially for those specific sale days that can really tempt your budget. Think Black Friday and Cyber Monday.
Set Up a Christmas Savings AccountHave you ever thought of opening a separate account just for your Christmas savings? It’s a great way to be extra disciplined about putting aside that money and not touching it. Check with your bank about opening a side savings account for your Christmas spending.
Have a DIY ChristmasHop onto Pinterest or Instagram to get some ideas for crafts that you can give as Christmas gifts. Searching for them now gives you plenty of time to buy the materials and put the effort into creating something that has just the right touch for the recipient. Even better, you have time to start over in case your first attempt looks more like a Halloween decoration than a Christmas gift.
Redirect Your Social FundSummer is the season for barbecues, swim parties and weekend getaways. With school back in session, though, your entertainment and travel budgets will probably go down. You know your kids will be busy with homework during the week, so save some money for fun on the weekends and redirect the rest for Christmas savings.
A little planning, along with some early saving, can make your Christmas a whole lot easier to enjoy. Wouldn’t you rather focus on Christmas traditions and quality time with your family than be stressed out about money? Yeah, we would too!
Plan for Christmas in advance. We hear now is a good month to start!
Start your Christmas sinking fund now with EveryDollar, our free budget software. Visit EveryDollar.com to learn how you can focus your money on what matters!
Tips from Mandy Thomas
First, make sure you know how much extra you can put down on it a year and what the rules are around that. You don’t want to put extra down and find out that you now have to pay a penalty.
BRAINSTORM WHAT THE NEXT 2-10 YEARS COULD LOOK LIKE FOR YOUI know this isn’t the “sexiest” thing to do, but it is so important to do this to make sure you are not just basing your decision on where you are now, but also taking into account the life changes that will more than likely be coming up in the pipeline or what will be coming up.
Think of Life Changes Such As:
REALISTICALLY FIGURE OUT WHAT YOU CAN AFFORDTake your monthly take-home pay (after you’ve paid taxes) and figure out what is 33% of your income. As a financial coach, I see a lot of people who are living in homes that they truly can’t afford and they are now feeling the stress of having their fixed expenses so high and not a lot of “breathing” room to get ahead. The reason I say to figure out what 33% of your monthly take-home pay is, is because that is the highest that you would want your TOTAL monthly housing expenses to be. If it goes above the 33% mark, you will really notice that you are having a hard time with other bills, because your housing costs are such a large percentage of your income.
If you can keep it towards the 25-30% mark that is better, obviously the lower, the better.
When you are figuring this number out, I am not just referring to your monthly mortgage amount, you will also want to include within this is:
One of my biggest concerns I see when people are wanting to purchase a home is not having a truly clear picture of your finances, before looking for a home. When you are working with a realtor, a builder or other home professionals, they are only able to help you out as much as you can clearly articulate your financial situation to them. If you aren’t entirely clear on your financial situation, don’t expect those who are trying to help you to be either!
They don’t see all of the things happening behind the scenes, they don’t know exactly what your expenses are, so you need to know this so they can properly help you find a home that is right for you, not just now, but in the future. But they can’t guess, so you need to do your own due diligence ahead of time, so they are able to help guide you into what is truly best for you.
FIGURE OUT ROUGHLY WHAT YOU NEED FOR A DOWN PAYMENTIf you are considering looking at a home that is around $150,000 and you want to put down 15%, your goal will be to save $22,500 for a down payment.
Sit down and actually play around with the numbers to see what you will potentially be looking at as needing to have saved for a down payment.
OPEN UP A SEPARATE SAVINGS ACCOUNT TO PUT YOUR SAVINGS INTO FOR YOUR HOME DOWN PAYMENTMost people have one savings account but they are trying to save for multiple things in that one savings account, which makes it really difficult to have transparency to know how much you have saved towards all of your goals. This is just one reason why I highly suggest opening up a separate savings account that is just for saving for a house, some banks even allow you to “name” the account, which I also suggest doing!
MAKE MASTERING YOUR CASH FLOW AN UTMOST PRIORITYThis is definitely one of the most important things to do before committing to putting extra towards your mortgage. When you have clarity with your money and you become really competent at mastering your cash flow (not just “budgeting”), you truly know how much extra you can put towards your mortgage without causing you to come up short in other areas. It will also help you to see your months that you may have higher income available to put towards your mortgage, so you can allocate it for it before it comes and all of a sudden is put towards something else. Feeling confident with cashflow management and taking control of your finances months in advance, is one of the skills that I help my financial coaching clients to achieve.
By making mastering cash flow a priority, one of my clients “D” (to protect her identity), we were able to make sure that all of their goals were being achieved including paying into hers and her husbands retirement funds AND we were able to make it so they could put $50,000 additionally towards paying off their mortgage each year for the remaining term.
FIGURE OUT WHEN YOU WOULD POTENTIALLY LIKE TO PURCHASEOnce you have figured out approximately what you need to save as a down payment, then figure out when you would potentially like to purchase.
If it is 2 years from now, that is 24 months that you have to save up. Which you can then figure out how much a monthly, you need to start saving right away.
If you want to save $22,500 for a down payment in order to purchase 2 years from now, you would need to be saving approximately $938 each month.
If you wanted to save $20,000 for a down payment to purchase in 3 years from now, you would need to be saving $556 each month.
Knowing how much you need to save each month, can really make it easier to figure out between you and your partner (if you are purchasing a home together), what the total needs to be that you will contribute and then you can discuss how you will break down what each person is contributing.
PAY OFF CREDIT CARD & CONSUMER DEBT FIRSTFocus on paying off any credit card debt or consumer debt that you may have, so you have this high-interest rate debt paid off. Then you can “roll over” the money that you were paying towards these debts, to use as extra money to put into your house down payment fund.
Lessons from Tasha Danielle
At the tender age of 7 I was already earning & saving money!
I grew up in a single parent household. My mom, who I adore, raised my two brothers and I after separating from my Dad. She taught me many things about financial literacy very early on. Saving the money I earned was consistently a topic. My mom paid my older brother and I small allowance of $5.00 every two weeks for chores that were completed timely. Even though I was only 7 years old I can remember her posting our daily chore schedule on a piece of paper in the kitchen! It’s funny thinking back on it today, Wednesday’s were my favorite- I was responsible for dusting the house before bedtime. She even had checks and balances in place!
I had to check chores off the list daily as they were completed and my mom would check behind it. If incomplete my allowance was docked by 50 cents! Needless to say, I did not have the option to procrastinate! There was no waiting until the end of the two weeks to finish everything if I wanted to collect my allowance. My mom even created an incentive to steal a chore from the sibling that didn’t complete a chore on time. So if I didn’t complete my dusting on Wednesday, my brother could steal it and have it added to his allowance! My mom wanted us to understand the importance of earning money at an early age.
In my early years, we lived in an apartment building with a corner store attached to it that claimed most of my older brother’s allowance! The corner store received some of my allowances however, I tended to save my money until we went to what I considered a “real store”. F&M Drugstore & KB Toys is where I liked to spend my earnings. My mom noticed we were spending every dollar we earned and she wanted to encourage us to save. She created an incentive for my brother and I. If my brother or I saved at least half of our bi-weekly allowance, my mom would give us an extra dollar. She increased the incentive if we managed to save more than half of our allowance! The saving incentive was also tracked in our kitchen on a piece of paper that hung to the wall. It prompted a little friendly competition between my brother and I on who could save the most. I remember saving so much that my mom had to change the incentive! This was the foundation for me being able to set financial goals and achieve them.
Talking to your kids about money doesn’t have to be taboo. My mom created an environment that taught my brother and I about earning and saving money. As such, the money conversation came up at least weekly as early as the age of 7! You may not feel it’s necessary to pay a child to clean up around the house and that is perfectly fine, but a child must have an opportunity to make financial decisions.
Here are 3 things to consider:
1. Earned and Unearned Money
If your child does not earn a weekly or bi-weekly allowance, consider awarding a small financial token for their birthday or for good grades on their report card and let them determine how to spend it. This will give your child some exposure to making their own financial decisions. According to National Standards, by Kindergarten children should understand that spending, saving and sharing are ways to use money.
2. Why Save???
My mother created an incentive for my brother and I to save. I encourage you to set a savings goal with your child for an item that they really desire at a price that would take only 3-4 weeks to save for. Children should understand that saving is a choice not to spend money today, in order to buy something in the future. Many students that I work with in the beginning of Financial Garden say that people should save. When I ask why should people save, early elementary students have a hard time explaining why.
3. Set the Example
Though my mom taught the importance of earning and saving, she did not personally model saving to my brothers and I. For me it was my grandmother who modeled positive financial behavior and I learned so much from her as well. Studies have shown that children learn best from modeled behavior. With that said it may be a good idea to share a household item that you’re saving for. For example, you could be saving for new pots and pans. Put a jar in a common area and drop money into the jar and explain the progress being made to your children. This provides them the opportunity to see you work toward a financial goal.
Please share any saving goals that you and your child have set!
Before you let your tax refund burn a hole in your pocket, give the money a purpose. Think about your personal financial situation and how you can make the most of your refund.
1. Start or Increase Your Emergency Fund
When things get tight, an emergency fund can ease major financial stress. Good practices suggest building your emergency fund up to 6 to 8 months of your salary and your refund to make a significant deposit to your emergency fund.
2. Pay Off High-Interest Debt
After establishing an emergency fund, the next best thing you can do with your tax refund is reduce or eliminate any high-interest debt that you’re carrying.
3. Spend It On Something You Need
Make the most of your refund by taking care of something important you've been delaying, like car repairs or dental work.
4. Make Home Improvements
Do you need a new roof? Is your kitchen outdated? Could new energy-efficient appliances lower your utility bills? Home improvement projects can immediately increase the value of your property while simultaneously making your home more comfortable.
5. Invest In an IRA
Depending on your income level, goals, age, and whether you have already fully funded your tax sheltered accounts, using your tax refund to get a head start on IRA contributions can be a great move.
6. Donate to Charitable Causes
On a tight budget, making charitable donations can unfortunately slip down on your list of priorities. Your refund gives you a chance to give a little back.
7. Spend It On Something You Want
You saved all year, and now you’ve earned the right to splurge a little bit. Don’t feel guilty about using the extra cash for a summer vacation or to treat your family to a nice dinner.
With more than 125 people in attendance, we had a great time at our Annual Member Meeting on March 1, 2019! Thank you to all of our members who attended.
SET CLEAR GOALS. Do you have clear plans for retirement, college, and other major life events? If not, define your life goals and then develop your financial plan to get there.
BUILD YOUR SAVINGS. Set up an automatic deposit into a savings account with as much as you can afford to put in the account. You’ll be surprised how quickly a little money can amass into a healthy savings account.
REVIEW YOUR AUTOMATIC PAYMENTS. Thoroughly review your accounts to make sure that you are not erroneously paying for old subscriptions or bills that have already been paid off.
MANAGE YOUR CREDIT. Paying off your credit cards and getting rid of those high interest rates is one of the best ways to put money back in your pocket.
REVIEW YOUR WITHHOLDINGS. If you’re intentionally withholding too much on your taxes to avoid end of the year taxes or to get a big payback from the IRS, that’s not a good practice. Use a tax calculator to make sure that your withholdings are accurate.
REVIEW INSURANCE POLICIES. Don’t insure your 10-year old car like Tesla. Make sure that you haven’t overbought on your auto, life, health and other insurance policies. Review carefully and make cuts where possible.
BUMP UP YOUR 401K. Add a little more to your 401K this year, especially if your employer does a matching contribution.
GUARD AGAINST IDENTITY THEFT. Monitor your credit reports and statements to ensure that your identity and finances are protected.
CNN Money shares these smart financial apps that will change the way you save, shop, pay, bank, invest and more.
Earmark. Avoid splurges and save. With Earmark, every time you forgo buying a latte or going out to dinner, you can place the money you would have spent on those splurges into an account earmarked for special savings.
Level. Simplify your monthly budget with this app that makes it easy to understand how much you can spend without breaking your budget.
Tax reform is here … how will it affect you in the upcoming tax season? About 42% of surveyed taxpayers don’t know if the new tax law will benefit them. EPB Employees Credit Union is here to help, providing you with information about the new tax laws and keeping you up to date.
Here are three of the most important changes:
1. Your Tax Bracket Might Have Changed
The seven tax brackets found in the former law remain, but a number of tax rates are lower. The income thresholds at which the rates apply also change. That means you can decrease your tax burden with deductions that place you in a lower tax bracket.
2. Families Find Relief
This most recent tax reform effort doubled the Child Tax Credit from $1,000 to $2,000. If you’re saving for your kids’ education via a 529 plan, this creates an opportunity to increase your contribution — tax-free — without trying to find those funds in your current budget.
3. Some Eliminations and Deductions Fade
Contrary to the interpretation of some people, the tax reform change did not immediately do away with the tax penalty that accompanies non-participation in a health plan. Since the window for such participation is now closed, if you find yourself outside of a plan looking in on tax penalties, your best bet is to determine a payment strategy.