The right shopping strategy can help you pick up all of your Christmas pantry items at rock bottom prices without adding any of the full price items to your cart.

Here are some of the products found on sale around Thanksgiving (at least around here):

• Flour
• Sugars
• Nuts
• Pie Fillings
• Chocolate Chips
• Turkeys!

On any given day you are likely to find:

• Receipts
• Debit and Credit Card
• Jewellery
• Books
• Water
• Baby socks
• Lip chap

Our night stands are only about 15” square, so even just a few of these items (on top of the lamp and alarm clock that have permanent residency there) can mean a cluttered, messy space. Even if I’m planning on putting much of it back in my pocket the next day, there’s got to be a better way to store it.

Here’s what I’m trying to do: I’ve purchased a small, pretty tray from the dollar store that fits out of sight in the shelves of my bedside table. Every night I’ll empty my pockets in there, and move down any books that are on the top. A fresh glass of water and my book choice for the night need be the only things sitting on the top when I climb in bed at night.

Making a quick cleanup of the bedroom part of our evening routines can ensure that we keep our bedrooms the sanctuary they deserve to be!

If you need help cutting down on the amount of clothing you have, here are two ways we let go of old clothing so our packed closets can breathe a little:

1. Every few months when you switch out your seasonal clothing, hang all of your clothes with the hanger facing the wrong way (hook facing out). As you wear and wash items, hang them back up with the hanger the right way. When it’s time to switch out your clothing again, you’ll be able to see right away which items you don’t ever wear.
2. Along the same lines, we often find that it’s usually mostly the same clothes that we are wearing over and over again, so even without using hangers we can be discerning about which items we should put in the Goodwill box (which is kept at the bottom of the linen closet…).

Bonus tip: For many areas of our house (including kids toys) we implement a something in, something out philosophy. We have a static amount of storage space for clothing or toys in our home, so if we’ve bought something new, we need to pass on something old. It’s a helpful way to keep things manageable, and also a good lesson in stores when we’re considering buying something new; are we willing to give something up to get this item?

1. Layaway. The most budget friendly and snoop-proof method of all, gifts aren’t even in your house until you’ve paid them off (usually around December 16^th), and it allows you to shop months before the holiday season. You’ll benefit from a low-stress December, and you’ll break the cost down over a few months, allowing you to save for them.
2. The Attic. If your home has a (clean and mold free) attic, especially one that is only accessible from in the master bedroom closet, you can store gifts up there wrapped or unwrapped. Some kids may still be able to get in there, but chances are no one will accidentally stumble up them!
3. The Kitchen. The cabinet above your fridge probably isn’t used for much, so if you know family members don’t look in there, you can stash some gifts and keep an eye on them.
4. The Shed. Shed’s aren’t often used around these parts in the winter (who wants to shovel a path to the shed once you’ve dug out the driveway and walkway?), so you could store any gifts that won’t be affected by the cold or possible dampness. Sheds are often a haven for mice in the winter, so keep that in mind when stashing that gift basket of gourmet crackers!
5. In Plain Sight. Put gifts inside boxes or containers that have non-interesting labels. Labels such as: “Extra hats and gloves”, “Old Yearbooks”, and “Scrapbooking Supplies” will probably keep kids and husbands from stumbling upon them.

What are some of your favourite ways of hiding gifts during the holiday season?

The holidays are forever creeping closer, so make sure you’re doing as much as you can early.  Leave the holidays as a time for celebrating and enjoying family, not stressing over last minute details!

1. Holiday MiniBook Cards by Minted.com

Minted.com has some beautifully designed holiday cards this year, including their Holiday MiniBook Cards.  If you’ve got lots of close family that lives farther away and doesn’t see a lot of your day to day life, this could be a great way to share it with them.  An upgrade from a normal Christmas card, but at a fraction of the price of a photo book!

2. Purse Perfector

What Grandmother wouldn’t love one of these organizers?  Anyone who carries a purse knows how easy it can be to lose things down in the bottom, even if it’s not a very large purse!  This great product helps to keep everything organized and in sight, but best of all, it can be quickly removed and transferred to a different purse, making it easy to change your purse with your outfit!

3. Photobook

Grandparents love being able to share photos of their families, so what better gift than a photo album.  Blurb Photobooks allow you to create permanent, coffee table book quality albums for a fraction of the price of albums offered by most photographers in their packages.  Consider creating a yearly album of all of the family’s best moments and photos so that Grandparents that live further away can still feel involved.  Blurb has the best (in my opinion) bookmaking software on the market, which allows you to personalize your photo book even further with fonts from your computer and an extensive database of page templates.  If you order through here today, you’ll save 20% On Your Entire Blurb.com Order (Code BLURB20).

4. A Family Tree

Help your grandparents to showcase the enormous impact they’ve had on the world.  They’re children and grandchildren!  This reverse family tree from Etsy shop Genuinely Yours starts with one couple and blooms from there with the legacy of generations.

Jar/Envelope Spending Plans

The biggest benefit of a jar or envelope system is that it helps us tangibly see how much we are spending in each category, and if we are diligent, keep us to our budgeted amounts.  Often when we are using debit cards for our spending (or worse yet, credit cards) it’s not until we check our online balance or get the statement at the end of the month that we see how all of the little expenses add up and we’ve somehow found ourselves over budget (and into the overdraft!).

How do you best start creating a system like this?  The two systems are very similar, but we’ll look at the jar system in this post because it is more of a visual reminder and we can make pretty labels for the jars.

Remember that budget you worked on last week?  What were the amounts that you budgeted for based on your monthly averages?  Discretionary spending includes expenses such as groceries, gas for your car or transportation, entertainment and dining, and personal care (haircuts, manicures, etc.).   Print off some of the labels below on label paper (Avery 5162), or print it on plain paper, cut out and tape to mason jars (or attach to the front of envelopes if you’re going that route!).  You can also make your own labels for the jars if you’d like.

There’s space on the labels for you to write the category and the monthly amount.  Save and print off new labels whenever you’ve adjusted your budget!

Next, you need to figure out how you’re going to track your spending in each of the categories.  If you live on your own you could just put the receipts in the jar and spend until the money is gone, but if you are budgeting with a spouse or partner and need to share the money in the jar, some sort of tracking system is necessary.  It is also helpful for accountability and to see that you spent most of your grocery budget at Starbucks on Pumpkin Spice Lattes (almost a forgivable offense!).

I’ve created some pages for you to print out and put in a half size binder.  You could also just print and cut a stack of them and staple them together.  Do whatever ensures that you will use it!

Below is an example of how to write down your expenses on each sheet.  Create one sheet for each category of spending and be sure to use them weekly at first.  After you’ve gotten used to it, you can change it to correspond to your pay period (more forms to come!).

Think you can make that work?  Give it a try!

Sinking Funds

Next, is the concept of sinking funds, which are basically monies saved up to cover the inevitable expenses incurred when you need to buy a new washer or stove, go on vacation, buy gifts for Christmas, birthdays or weddings, or simply just to save up for all of your home decor projects.  The idea is two-fold.  First, we live in an instant gratification society and we’ve developed the attitude that if we see something we want, we should buy it right away, even if we don’t have the funds to cover it.  Sinking funds require patience; each paycheque you put more and more aside and slowly build up towards your idea balances.  Second, instead of putting sudden expenses on a credit card, we have our own savings to use in its place.

What kind of expenses are most typical for sinking funds?  For our own funds, we are at various times, funding accounts for: auto expenses, home expenses, gifts, vacations, and baby expenses.  Consider everything in a year that you KNOW will come up, but that aren’t necessarily monthly expenses.  Oil changes, chimney sweeping, weekend getaways and a gift for your cousin’s wedding are all things you probably know quite in advance that you’ll need to pay for, but often we leave it to the last minute and have to pull money from somewhere else to cover it.

Steps to creating sinking funds:

1. Decide how much you need yearly to cover your expenses in each of the categories.  The amounts in the spreadsheet below are the amounts Craig and I have assigned to each category, but it should be based on the kinds of expenses you’ve paid in the past.
2.  Divide that yearly amount by the number of pays you have per year, and this is the amount you need to be setting aside each time to help cover your expenses.
3.  Open an account to cover these expenses.  No fee bank accounts such as ING are great for this purpose; you can even open an account for each category, although I would find that more complicating.
4.  Make it automatic.  Set up an automatic transfer that takes place after you’ve been paid each time so that you don’t even have to think about it.
5.  Starting using the accounts to cover your abnormal expenses.  You won’t be able to buy that washer or stove right away, but you’ve been buying things on credit for years, this kind of savings takes time!

Here’s the document that I use to track our sinking funds.  We have a single bank account to hold all of the funds, set as ‘savings’ on our debit cards so that we can access the funds if we need to at the store.

 Screen capture of the main page.

Important to consider:

- You’re probably never going to have the total yearly amounts in the accounts, but that’s the idea.  It is a sinking fund because the funds are constantly in use.
-If the accounts do reach their maximum (say you haven’t used the gift or vacation accounts for a while), you can stop funding them until they dip below their maximum again.  Similar to a debt snowball (more next week), redirecting the funds will help fund them all faster and move you towards other savings goals.
- If you have a major windfall and have a. paid of debts, and b. fully funded an emergency fund, fully funding your sinking funds can be a great investment so that you can move the funds into your retirement savings or generous giving until you’ve needed to use some of the sinking fund money.
- Create new accounts for all of your goals.  Want a new boat or car?  Create an account and assign a monthly or yearly amount to start saving!

This week’s challenge:

Perfect your jar or envelope system (try it for a month and see if it makes a difference in the amount you’re spending and your ability to follow the budget) and set up a sinking funds account at your bank of choice.  Use the document I provided or your own creation to begin tracking the debits and credits of each individual account.

A Quick Debt-Proof Living Snapshot

10-10-80

Give 10%; Save 10%; Live on the remaining 80%. It’s as easy as that. Out of the 80% comes your sinking fund (Freedom Account according to Debt Proof Living) contributions, as well as your Rapid Debt Repayment Plan funds.

Give

Giving, whether through tithing or donations to various charities or research funds, helps to instill in us a degree of humility and awareness of what it is to be without.

Contingency Fund

Build up a minimum 3 months worth of living expenses in a separate account. Fund this with the 10% of your income that should be going to savings. A better idea would be to save 6 months to a year to be on the safe side. If you have extra monies coming in (i.e. tax returns, cash gifts, or bonuses at work), throw it in here first. This is what will keep you back from the ‘edge’ and ensure that you won’t erase all of your hard work if you are temporarily out of work, have a medical emergency, or have major repairs to cover before insurance kicks in.

The 10% that is designated for savings can be moved around a little bit once you’ve gotten a fully funded Contingency Fund ready for any emergencies. Once your contingency fund has been topped up to your desired amount, boost your contributions to your Freedom Account so that you have a year’s worth of coverage in each of the sub accounts. Next, focus on your Rapid Debt Repayment Plan, and add in your extra 10% so that you accelerate the whole cycle. Finally, begin building an investment portfolio, including paying off your mortgage or saving up a sizeable (conventional mortgages only people!) down payment, funding various retirement and education funds, and add in any ‘dream’ sub-accounts you may have, to your Freedom Account to begin saving for things like snowmobiles, extended vacations, and additions or renovations to your house!

Freedom Account (Sinking Funds)

Certain things in life are guaranteed. The tax man will come; people will get older, get married, and have babies; cars will break down, so will appliances and toilets; vacations will be needed and our life, auto and health insurance will need to be paid (even if they are charging too much!). If these things don’t need to be paid on a monthly basis, most of us forget to budget for them, and very few of us put that money away for when the bill comes due.

Take a look at all of your irregular or abnormal expenses, including car and home repairs and upgrades, gifts, vacations, personal spending, property taxes, auto insurance, and more, and decide on a figure that represents how much you spend (or think you will spend) on these things each year. Then divide that number by how many pay cheques you get each year. Each month, put that money aside in a separate chequeing account, and whenever an expense comes up, write a cheque for it using that account. Keep a ledger documenting each of your debits and credits to the account.

Check out how I keep track on mine here, and download the excel document to get started on yours!

Rapid Debt Repayment Plan

Basically, order your debts from shortest pay-off to longest pay-off, and pay the minimums on everything but the first one, dumping everything extra you can into it. Then, when that debt is paid off, redirect all of that extra money into the next debt. She recommends ordering your debts in order of interest rate (highest to lowest), but says that in our ‘instant gratification’ society, some may need to see single creditors paid off sooner, so they should stick with the shortest to longest method.

On her website she has a RDRP Manager that you can use to track your debts and your payments and it will show you how many payments you have left and your final pay-off date. I like seeing the reminder, so I joined with the monthly membership, which also gives me access to all sorts of calculators, newsletters, and great tips for saving money.

That is perhaps the biggest thing that (in my mind) separates the Dave Ramsey and Debt-Proof Living methods. Even for non-members, you can join the free Everyday Cheapskate daily column and receive great tips by email on ways to save money. She really teaches frugal living, and shows how you can find that extra money in your income to have your debts paid off sooner.

This Week’s Challenge:

If you have consumer debt you’re working towards paying off, consider using the below calculator or spreadsheet to create a payment schedule and see how tweaking your payments and the order of payoff can save you THOUSANDS of dollars in interest.

Once you’ve compared paying off high interest to smallest amount first, and seen how adding even $100 extra each month can make a BIG difference, start thinking about the ways you can start cutting your spending to help generate that extra cash.

Resources:

Debt Reduction Calculator Spreadsheet (recommended by Canadian Debt Girl)
Online Debt Calculator

Sometimes it is the littlest purchases that add up to the biggest expenses in our budgets.  For example, my biggest indulgence during the autumn season is hitting up Starbucks for a Pumpkin Spice Latte.  At around $4 a pop, and a twice a week visit, it’s a $400 a year habit!

$4 x 2 = $8 x 52weeks = $416
(And let’s not ignore the 310 calories for a Grande.  That adds up too!)

I don’t smoke, but if you’re a pack a day smoker, your stealing more than just years off your life; you’re giving away more than $2900 a year. Unfortunately, that’s not the worst of it.  If your 25 and instead invested that money in something as low risk as a money market account, you’d have almost $300,000 by the time you retire!  Add on to that the fact that many health organizations claim that each pack actually costs you (and the government) $150 when you factor in healthcare needs, you’ve got an expensive habit!

What is your fix?  If you did the math on it, how much are your spending per year to keep it up?

What Does it All Mean?

Budget is a bad word to a lot of people.  If you’re like my husband, it makes you feel restricted and too much time on a budget may make your impulse shop.  If you’re like me, budgets, and the savings and financial security that come with them, help you feel more in control of your life.

I’ve said it before that I truly think that budgeting and successful financial planning is about priorities, so it is important to sit down (with your significant other if you have one) and decide on some sort of plan for your life.  It doesn’t have to be a strict ‘5 year plan’, but just the basics of what you would like to accomplish.  Do you want to be mortgage free before retirement?  Is travelling important?  What about paying for your kids education?  Each of these questions require action from you today.

You won’t be mortgage free at 65 if you’re not working to get your other debts paid off and then turning your focus towards accelerating your mortgage pay down.  Travelling can be expensive, so it’s important to begin setting money aside in your sinking funds now for those trips you’d like to plan down the road.  And that education fund?  Don’t forget that compound interest means that the earlier you start, the less you have to invest in the long run.

Budgeting is not about restricting your spending or focussing so much on saving money that you lose sight of enjoying life.  It’s about taking ownership of the income that comes into your home and giving every dollar a job.  If you’ve set up a successful budget, it will not only be moving you towards financial freedom and reaching the financial goals you have in mind, it will also give you the emotional freedom to enjoy your life today.  You don’t have to spend time worrying about how to pay the bills each month if you’re living within your means and setting aside money for those emergencies.  You can do fun and memorable things with your kids while they’re still small because you’ve set up a sinking fund for family outings or an annual zoo membership.

This Week’s Challenge

Take one final look at the budget you’ve been creating and see if there are any areas you would like to change.  Any categories higher than you’d like?  Any lower?  If you would like to up your savings or debt repayments, you know it needs to come from somewhere else.

In case you were wondering, in response to the Starbucks problem, I’ve switched to cider when I’m there (much cheaper!) and have found an at home pumpkin spice latte recipe that takes the cake!

Buy a ListPlanIt Financial ePlanner for $7!

Consider this your budget bootcamp.  Budgeting can seem overwhelming at first, but once you fall into a rhythm and get used to the constrains of your budget, following it is easy!

We’re starting simple and working on learning the tenets of an effective budget and creating a draft budget that we will tweak and perfect over the next few weeks.

More importantly, we’re going to be making the decisions about where our money is going instead of wondering where it went when we come up short at the end of the month.

The Basics:

Budgets are quite simply the total of your income minus the total of your expenses; if your income is insufficient to cover the cost of your bills and expenses each month, you’ll either be dipping into savings or credit by the end of the month, or be going without when the money runs out. Income you should include in you monthly budget should include gifts and tax rebates, etc., however don’t include these items when you are planning your budget as they are not regular. When considering expenses, you should be including your monthly bills, fluctuating expenses such as groceries and gas for your car, as well as savings, giving, and savings for abnormal expenses as well (to be discussed more next week).

A budget is a guideline to direct where your money is going each month, and it is up to you to make sure you are setting realistic amounts in your budget that your family can stick with. If your family can’t living on $200 a month for groceries and you set that as your monthly amount, you’ll only end up going over and borrowing the money from somewhere else. Chances are you’ve done that once or twice already and the result has been using the credit card a little more that month.

If you already have a budget, consider how well it’s been working so far. Are you able to stick with the amounts you’ve written down? Are you maximizing how much you put into savings each month without sacrificing the things you love?

Zero Balance Budgeting

Like I mentioned earlier, if you’re not designating where each dollar will go each month, chances are you’ll come to the end of the month scratching your head wondering how you’re in your overdraft and have nothing to show for it.

If you create a zero balance budget (exactly how it sounds; your expenses and income should be equal, resulting in a zero balance), you are giving a name to every dollar you make, giving you the power over your spending. It also means that when you’ve run out of money in a certain category (for instance entertainment), you either need to go without until the next pay check (not ideal for categories like groceries), or ‘borrow’ money from another category. Creative planning and LOTS of restraint will help the money to stretch further, and over time you can adjust the categories to better reflect your spending.

Steps to a better budget:

1. If you have time, spend a few weeks or months tracking your spending. If you need a budget immediately, use your bank statements and past bills to compile an average for your spending and break it down into categories.

2. Make a list of all of your bills and expenses (i.e. groceries, gas, personal needs, sports or fitness memberships, etc.).

3. Using a budget worksheet (see below), write down all of the NECESSARY expenses first, such as mortgage payments, car insurance, and groceries, followed by your other expenses.

4. Next, add in a line for savings. Typically this should be at least 10% of your income, but designate whatever you can.

5. Compare your total expenses to your total income. Are they equal or do you have a surplus? Great! If not, you have two options:
a. Cut back on some of your expenses.
b. Generate more income

6. Start by going through your expenses and figure out if there are any bills your can reduce or eliminate. Maybe you can go without cable or change to a cheaper cell phone plan. In the next few weeks we’ll go over more ways for you to reduce your spending and get creative about saving.

This weeks challenge:

Create a zero balance budget for your family using the above steps. If you are married, include your spouse in this process as it’s a lot easier to stick to a budget if your partner is on the same page – especially since you can keep yourselves accountable!

Once you’ve done this or if you already have a budget, start considering the budget categories where you can make some immediate changes to to slash your spending and start directing more to debt reduction and savings.

Bonus challenge:

Create a jar or envelope system for your discretionary spending categories (see online budget worksheet at bottom of post). For instance:

Groceries $200/month
Transportation $300/month
Personal Care $50/month
Miscellaneous $50/month
Kids Allowances $40/month
Entertainment $200/month

Next week we’ll focus more on budget envelopes and creating a system for tracking your spending throughout the month.

Budgeting Resources:
Free Budget Worksheets:
Online (Til Debt Do Us Part)
Paper (Dollartimes.com)