CNN had this post on the Association behind the popular lottery game, Powerball, announcing that, starting January 15, 2012, the price of a ticket to play Powerball would be doubling, to $2 a ticket.  If you read the article, you’ll notice several things.

1. The starting jackpot will also double, from $20 Million to $40 Million
2. The second prize (all the white balls without the red “powerball”) will increase from $200,000 to $1 Million.
3. The Power-Play option, which allows you to pay $1 to double any prize (except the jackpot) will remain at $1

There are a couple other things that you should also notice, but probably won’t.  But, they are likely the more important ones.  First, the number of red “powerball” balls will be decreased from 39 to 35, which will “decrease the odds of winning the jackpot slightly.”  To me, decreasing the odds translates to less chances of winning.  But, that doesn’t make sense.  If there are less choices in the “powerball”, doesn’t that make it more likely to get that match, thereby increasing your odds of winning?  Maybe that’s just a typo.  If it’s not, then I obviously need a new class in statistics and chance.

Second, because the starting jackpot is increasing, and the price is increasing, they estimate that the average jackpot will increase to approximately $255 Million which is a bit more than the average jackpot of $141 Million now.

Finally, the last thing that you should notice is the remark that “We know that most folks play for the big jackpots and this game will have more of those more often.”  I know several people who only play if the jackpot is over a certain value.  Say $100 Million.  The association has obviously noticed that as well.  Heck, it probably didn’t even take a statistics genius to pull the sales numbers and see the spike when you hit a certain amount.  So, rather than find a way to get people to play more often, (North Dakota has a subscription option) they just make it more certain that the jackpot will reach the higher numbers faster, thereby getting those people to play more often.  I wonder if those people who wait until the jackpot is higher in order to save money on lottery ticket costs will realize that they’re buying tickets more often?  A few might, but I bet the majority don’t.

My personal stance on Lottery games is that if you’ve planned for the expense as a “fun” entertainment expense, then, go right ahead and buy those tickets.  But, if you’ve got bills to pay, food to buy, and no budget for the tickets, you really should avoid them at all costs.  I’ve played off and on over the years, and I am one of those people who generally only buy a ticket when the jackpot is really high.  Will I buy tickets more often now that the jackpot is going to be higher, faster?  Probably not.  It just means that the number will have to be adjusted a bit.  Maybe I’ll wait until the jackpot hits $200 Million now…

What about you?  Do you play lottery?  When?  How often?  Will an increased cost per ticket change your habits?

photo credit: Lisa Brewster

We’re only a few days into the new year, and chances are that several of you have already broken at least one of your new years’ resolutions.  You’ve eaten way too much food.  You’ve skipped a day at the gym.  You’ve overspent on some key category.  Partially, it’s not your fault.  You probably made resolutions that wouldn’t stick in the first place.  They just aren’t specific enough.  Resolving to “lose weight”, “work out more”, or “spend less” are useless resolutions.  You’ve got to get specific with them.

Set some specific GOALS.

Instead of just making resolutions, create some specific goals to go along with them.  Instead of “lose weight”, set a specific goal, like “lose 15 pounds”.  Setting a goal not only gives you a specific benchmark to gauge your success, it also helps to motivate you to accomplish those goals.  Financially, we can use this to our advantage.  What spending events do you know will be happening in the coming year?  Maybe you’re like us, and will need a new set of tires for one of your cars before the next winter hits?  Set a specific goal to save so that the spending event doesn’t catch you with your proverbial financial pants down.  January is a terrific time to start planning your savings and spending goals for next Christmas.

Track your progress.

Setting goals doesn’t do you any good if you don’t track your progress towards accomplishing them.  Whether you’re weighing in to track a weight lose goal or tracking account balances to track progress towards a savings goal, you’ve got to track them.  There are plenty of ways to go about it.

1. Create a list of your goals – This doesn’t have to be all that fancy.  In fact, you can do it on a sheet of paper if you like.  Just list the goals, the amounts your saving towards the goal, and leave room for a running tally of how much you’ve saved towards the goal.
2. Track your progress – The accountants in the crowd will have a savings account with ledger balance entries that mark each penny for the goal that it belongs to.  If you’ve just got a list, just keep a tally on the list of how much you have saved.
3. Keep your hands off – Be disciplined about your savings goals.  That money has a purpose, and the fact that you haven’t spent it yet doesn’t mean that it’s available for other uses.  Once the money is in the savings account, it stays in the savings account until the event/expenditure that it was saved for arrives.
4. Spend what you’ve budgeted.  Saving for expenditures can be a great way to keep yourself to a budget. Once you’ve met your goal, that’s the money you have budgeted for the expenditure.  Don’t dip into your other funds to spend more on the event.  Keeping to your budget will help you reach your overall financial goals.

Setting specific goals and being diligent about tracking and saving towards those goals is a great way to improve your financial situation.  Even if you’re not sure that you can do it, I encourage you to give it a try with a few small goals.  Once you do, and you start to see your progress, you’ll find yourself making goals for all kinds of things in your life.  And, you’ll be accomplishing them more and more often.

Additional note:  I like to use my ING direct account to help save towards goals.  Their system allows for unlimited sub-accounts.  Once you’ve got an account set up, simply create a new sub-account ING Direct Orange Savings and rename it with the name of the goal that you’re saving for and the amount that you are aiming for.  e.g. “New Tires – $750″.  Once you’ve got them all set up, you’ll be able to easily see what goals you are saving for and what your progress is.  Many banks and credit unions will allow you to set up a limited number of sub-accounts, so you’ll have to ask at your institution if you don’t decide to use ING Direct, but I’ve never found another place that makes it as easy as ING Direct.

How do you plan, budget, and save for your financial goals throughout the year?

photo credit: Images_of_Money

Despite the best of intentions and the clearest of budgets, sometimes holiday spending can snowball out of control. It can start with an innocent extra box of ornaments or a gift for someone not on your list, and before you know it, you’ve charged the entire month of December on your credit cards and you’re facing the New Year with bills you’re not sure how to pay.

Even if you have gone overboard this year, it doesn’t mean you have to spend all of 2012 digging yourself out of the hole. Here’s a step-by-step and (relatively) painless plan for paying off your holiday spending spree.

1. Transfer your credit card balance responsibly. To avoid having to pay interest on your purchases, look into transferring what you owe to a 0% balance transfer credit card. This will give you a little breathing room to pay off your holiday excess—the transfer term is sometimes as long as year or more.

You will generally face a nominal transfer fee of around 3% of the balance, but that will still save you a great deal of money compared to your interest rate, provided you can pay the balance off before the 0% introductory rate expires. As always, make sure that you use this transfer along with a payoff plan (step 2) in order to keep yourself afloat. If you’re not sure about your ability to handle the temptation of a new credit card, then skip right to step 2.

2. Create a payoff plan. With your budget (you do have a budget, right?) and a calendar in hand, determine exactly how much you can send to your credit card each month or with each paycheck. If possible, set up automatic payments to the credit card for the day you receive your paycheck so you don’t even have to think about it. And to keep yourself motivated, start a debt payoff thermometer on a whiteboard or online. (Online thermometers are generally created for fundraisers, but they work just as well for debt payoff). A visual of how far you have come and where you still need to go will help you to remember the big picture when temptation strikes.

3. Find extra ways to make money. Even with a period of 0% interest and a payoff plan, a truly epic spending hangover may still take some time to recover from. If you want to make sure that this lapse in judgment affects as little of your New Year as possible, here are some ways to “find” extra money to send to the debt:

Go on a Financial Fast in January

Just as you might want to refrain from drinking for a while after an all night binge, you might also want to put the kibosh on your spending for some time after the holidays. Basically, you will choose a certain amount of time during which you will refrain from spending any money outside of absolute necessities. It’s very important to be brutal with the definition of a necessity. For example, you can eat through the food you have in your pantry, rather than go to the grocery store during your fast.

Michelle Singletary of The Washington Post recommends committing to at least a 21 day fast in order to see the best results. And after a month of excess, it will feel great to know just how little you need to spend in a month.

Sell Your Gifts

We all receive gifts that aren’t quite right. It may feel strange, but there’s nothing wrong with selling your gifts and gift cards on sites like Ebay and www.giftcardgranny.com. It means that the gift will truly be appreciated and that you can feel more financially comfortable. Just make sure you sincerely thank the giver. They are, after all, giving you an opportunity to get your financial ducks in a row, even if that’s not the gift they intended to give you.

Earn More Money

While there’s only so many ways you can cut your spending, your earning potential is virtually limitless. If you’re still not sure how you can pay off your debt quickly, try to find a second income stream that you can send directly to your credit card. If you find something that you really enjoy doing, you’ll be spending your time more wisely, as well.

The Bottom Line

We all make mistakes, particularly when temptations are around every cheery holiday corner. The bigger mistake would be to ignore the problem and let it get out of hand without dealing with it. Don’t start your 2012 in the shadow of your poor 2011 decisions. Take charge of your finances and make sure your New Year is a great one.

Emily Guy Birken is a freelance writer and regular contributor to PTMoney: Personal Finance. She lives in Lafayette, Indiana, with her mechanical engineer husband and infant son. Her musings on life, parenting and money can be found at The SAHMnambulist and Live Like a Mensch.

photo credit: faster panda kill kill

With Christmas less than two weeks away, you may be feeling the crunch to get the perfect gift in time. Or perhaps, your gift budget is running low, yet you still have quite a few people on your list to give gifts to. Here are easy last minute solutions to earn free or cheap gifts for the season.

1. Swagbucks:

Many people have mentioned the fun and ease of Swagbucks. Have you signed up already? Are you participating every day to get bucks? Spending just a few minutes each day searching, doing the daily poll, and other small and fast tasks will add up quickly. You will easily receive more points for every person that signs up under you. Once you have someone sign up under you, every time they earn a Swagbuck, you earn one too. For easy earning, sign yourself up and then have your spouse or family member sign up under you. My husband and I spend minimal time on Swagbucks and earn at least a $5 Amazon gift card each month. I know you may be thinking, “What can $5 buy me on Amazon?” With no taxes (in most states) and a prime membership, $5 can choose from a lot of small and affordable gifts for kids and friends. Also, the Amazon gift card available on Swagbucks can be combined in your Amazon account to add up to a greater amount.

2. Coinstar:

While Coinstar does not exactly reward you with free cash, it can turn your huge coin collection into real hard gift cards. When you cash in your coins to Coinstar and redeem them for gift cards, including the Amazon e-gift certificate, you do not have to pay any extra fees that are usually associated with cashing in coins for cash. Coinstar recently added gift cards for Chili’s Grill & Bar, Maggiano’s Little Italy, Papa John’s, and Toys”R”Us. You may be surprised by how many coins you have. Even cashing in enough to earn a $5 gift card puts you $5 ahead in your spending budget.

3. Homemade:

Homemade gifts can be wonderful gifts. They are thoughtful and usually cost more time than money. So if you have the time, try making things from scratch. Here are some ideas for fun gifts to make under $5:

• Make homemade caramel sauce and pair it with homemade hot chocolate mix. Place them in small glass jars with a cute note saying, “Have a sweet Christmas”.
• Pair a small bag of gummy worms with a notebook full of quotes from books, a pen, and perhaps a book (check the local thrift store for great deals). Attach a note saying, “To my favorite book worm”.
• A bag of popcorn with a handmade ticket that says, “Admission to One Free Movie Date with me” (Of course, this may cost more than $5 when they do wish to see the movie, depending on what time you go).
• Cover a wooden letter (check your local craft store) with yarn for a home decor gift great for the whole family.
• Fill a tea cup with several bags of tea and pair with a side of homemade scones or tea cakes.
• Bake bread from scratch and pair with homemade or store bought jelly.
• Homemade play dough for children.
• A big tin of homemade cookies or brownies.

Just because your Christmas budget may be tight this year, there is no reason to stress out over gift giving. Most people are appreciated at the thought behind the gift. Always pair the gift with a special card or note to really show the gift receiver how much you appreciate and care for them.

photo credit: shimelle

My family and friends can’t stand going shopping with me. I used to be easily influenced into buying anything. Now I simply don’t want to buy anything. I’m the worst person to go shopping with now. I second guess every purchase. If I do end up buying something, I ask myself, “what will I get rid of now?” You know, the one in and one out policy. I don’t like to fill up my place with stuff, I would rather experience more.

With Christmas right around the corner we’re all shopping and the malls are jam packed. It’s too tempting to bust out the credit card and buy that perfect Christmas gift for that person on your list. Financially gluttony is way too common around this time of the year. I could go in the direction of racking up massive amounts of credit card debt by buying stuff, but I’m going to go in a different direction. I wanted to get into the actual stuff that we buy. I wanted to focus on what happens with all of the things that we spend our money on.

Is your stuff owning you? How can you tell? Let’s look at a few warning signs when it comes to letting your stuff take over your life:

You can’t get rid of anything.

This is a serious problem. Hoarding is very addictive and there can be no boundaries. Once you start to hoard it’s going to be difficult to stop. You’re going to want to hold on to everything. We all know someone that has a home filled with stuff from the 70s that they really don’t need any more. If you find yourself unable to get rid of anything, this is a sign that your stuff is taking over!

You have no space in your home.

If you can barely get around your place because of all of the stuff, then it’s definitely time to let go of a few things. Stuff is clutter and clutter sucks. There’s no other way to put it. I once rented out a mini disposal bin from a friend and got rid of a whole garage full of stuff. What’s the point of a garage (or basement or spare room) if it’s unusable because there’s too much crap in it? When you have no space this means that you got way too much stuff.

It feels like you never have enough.

When you can never have enough stuff, you’re letting your stuff take over. There’s always an excuse to get more stuff. If you feel like you don’t have enough you’re going to keep on accumulating more and more stuff until you can even find your bed in the room. If you can never have enough, it’s time to break loose of your stuff.

I hope I didn’t scare you hoarders away just yet. What if you’ve noticed some of these warning signs? Is there a solution? Of course there is. There’s no need to stress because you can easily get over this little love affair with stuff. How can you break free from your stuff?

Sell your crap for money.

This is the most obvious solution to dealing with stuff. Since there’s a monetary value behind all of our stuff it makes it difficult to just throw it out. Instead of throwing it out, you can always sell it. As they say, “one man’s trash is is another man’s treasure.” There are many theories and techniques on the Internet when it comes to selling stuff. Mine is simple.

Go on Kijiji, put up an ad, and wait for the responses. If you don’t get any then re-post the ad on a few other similar sites. I’ve always found success with selling my stuff on Kijiji. Just throw something on there RIGHT NOW and see what happens.

Done your stuff to charity.

If you can’t sell your stuff or just can’t get rid of it, then you can always donate it to charity. This is what I started doing with my clothes. I purge my wardrobe every few months. As time goes on, my style changes and as does my size. I work out often so I have plenty of clothes that doesn’t fit. I either give it to my friends or donate it to charity. Clothing is meant to be worn. Not sit in a closet.

Try to experience something cool.

I find that one of the main reasons that we all spend so much of our money and time on stuff is that we don’t know what it’s like to spend money and time on cool experiences. In the last few years I started to go on more trips, look for more unique experiences, and experience more in life. Before I started spending my money on experiences I would just random buy arbitrary crap. When I started to travel I learned that there was so much more to life.

At the end of the day, it’s perfectly normal to be a hoarder. The good news is that you can break free of this habit easily!

Are you ready to break free from your stuff? Let 2012 be the year where you become clutter free.

This was a guest post from Martin of Studenomics, a fun blog aimed at helping you figure out what to do after college and how to find the best credit card for students. If you want to invest your hard earned money you can learn about screening tenants to protect your rental property.

photo credit: justinpickard

With the recent changes in my employment, it’s become pretty darn important for us to not only keep to our budget, but to reduce our budget as much as we can in order to keep from sending our finances into the whirlpool of red ink that is broke.

One of the ways that we’ve got to cut back, because of the time of year, is in our Christmas present shopping. We’ve already come to the agreement with our extended family that we wouldn’t be exchanging presents with them. However, with the wonderful consumerism myth that is Santa Claus, it’s a bit more difficult to completely cut off the kids from any presents whatsoever. With that in mind, we decided that we’d still be getting the kids a few things, but would have to take advantage of as many great deals and coupons as we possibly could. And, you all know what that means.

As a general rule, I avoid the masses of people that throng to the Black Friday specials. I don’t have the patience for all those people rushing around the aisles, searching for that one last electronic door buster special, or digging through the mountain of cheap DVDs in the middle of the aisle. But, when you’ve got to save some money, sometimes you’ve gotta take a few risks. Late Thursday night, after all the turkey had been eaten, we went through the flyers for the stores and decided on a few things that we should pick up to give to the kids.

Luckily, for us, our kids are still young enough that they are satisfied more by quantity, than by amount, so it’s easy for us to buy a few bundled items and pack them individually and still come away with as much present opening satisfaction as we would have otherwise.

We took the tips that I wrote a week or so ago, and put them to good use. We went into the day with a detailed idea of what it was we were looking for, and where we were looking for it. We had a list of what we wanted to get, and a budget to spend on that list. If the stores were out of something, we didn’t substitute with the similar, more expensive, item that was conveniently set up next to the empty shelves.

And, we conquered Black Friday. We stuck to our list, only buying one extra item. We not only kept to our budget, but we beat it! When we were done with our busy morning of shopping, we had everything on our list, and we’d spent less than $150! Christmas will be a little lighter under the tree than it has been in previous years, but I’m pretty sure the kids will be happy with it, and we’ll all have a great time, like usual.

Now, we just have to avoid the impulse purchases that will come today in all the Cyber Monday emails and ads, and we’ll be all set. But, we conquered Black Friday, and that’s something!

How did you all do this Black Friday? Did you go out and shop with the masses? Did you stay home and polish off the turkey leftovers?

photo credit: joiseyshowaa

If you’re like almost every other American, after you’ve gorged yourself on all the Thanksgiving day feasts, you’ll be headed out to do a little gorging of a consumer variety.  Black Friday is well known as one of the largest shopping days of the year.  Most every retail store has some huge deals for the turkey-drunk shoppers that wander to their doors.  And, like most every other American, you’ll likely spend way more than you had planned on spending.

As your favorite personal finance blogger, I urge you to not do that.  I’m all about buying what we need at a price that is below the normal retail price.  Sales, coupons, and rebates are the way to go when buying things that we need.  But, chances are, the things that will be on sale on Black Friday will not be things that you need.  In fact, they’re likely to be things like big-screen televisions, computers, and the hot toy of the day.  You’re going to be tempted to buy them all, because the marketing department makes it look like such a incredible deal!  Here’s some tips for avoiding that temptation, and coming away from your Black Friday shopping with a happy account balance.

1. Have a budget.  This should be the only tip you need.  But, you’ll get in the store and be tempted.  But, having a defined budget for how much you are planning to spend is still a good thing!  Even if you go over that budget, you’re much more likely to at least stay close to it if you have a budget, than you are if you don’t have one at all.
2. Make a list.  You’re likely shopping for gifts for everyone, hoping to make them all happy while saving some money on what you buy them.  Make a list of the people you’re planning on buying for, compare it to the flyers that will be inundating your vision over the next week, and then make a master list of people, with the things you plan on buying for them, and where you’ll be buying them.  Now, stick to your list!
3. Be aware of prices.  Just because the marketing department put the price in big yellow letters over a big red starburst does not mean that it’s really a good deal.  The stores will be full of items that they are marketing as a big savings, when they really are not.  Be aware of the prices of competitors, sure, but also be aware of what the price for that item was last week and be wary of artificial sale prices that aren’t really sale prices.
4. Don’t fall for the swap.  Many of the places will have a very limited amount of the big sale items on hand.  When they run out, they’ll “swap” the sale item for a similar item that’s more expensive.  You’re there for the big sale item, and you can’t leave without it, so you pay the little bit extra to get the similar item.  Usually, that “swap” item is regular priced, and not on sale at all.
5. Free can be bad.  More than any other day in the year, the stores will be pushing free items.  “Buy a tickle-me-broke, and get a free tin can!”  The free item is usually a low cost item (loss leader) that they can afford to give away, while the item you have to buy is usually not on sale for as much as they’d like you to believe, and is a much higher profit item.

The biggest thing to remember while you’re doing your shopping next friday is to be aware.  Be aware that the store isn’t out to save you money.  They want to make money, so they will do what they can to bring you in the doors with a huge sale and then sell you all the high-profit items that aren’t on that huge sale list. We’ve all seen the videos each year of the people trampling each other trying to get one of the ten of those super cool kitchen gadgets, or video game systems.  Don’t be that person.  Be conscious of what you want to buy, how much it sold for before, and what the price should be the day you’re buying it.  Have a set amount you want to spend and stay close to that amount.  You’ll be happier that you did.

What are your plans for Black Friday?  Gonna be in the crowds at midnight?  Or wait until it cools off later in the day?  Or, are you a Cyber Monday shopper?

photo credit: Matt McGee

Every day, I hear people say that they don’t use coupons because they don’t have the time to go through the papers and mailers and clip the coupons. “It just takes too much time” they say. Those same people, will spend hours budgeting and finding ways to save themselves money, but they don’t see couponing as a viable use of their time and efforts. While coupons may not be as important to your financial health as a budget, they can be just as good as many of the other saving methods that you will employ.

With the popularity of extreme couponing, it’s no wonder that people feel that they need to spend hours each week pouring over newspaper inserts, clipping coupons, then sorting them all into categories and then making plans for where they’ll shop and what they’ll buy. In their mind, they see piles and piles of inserts, and closets full of extra supplies that they’ll need years to use up.

Couponing doesn’t need to be extreme, though. If skipping your daily latte can be a good strategy for saving a few dollars a day, so can clipping a few coupons. Taking a few minutes each week to flip through the inserts in your paper and clipping the few coupons that you find for the things that you buy regularly can easily save you a few dollars a week. Signing up for manufacturer email newsletters can often result in an electronic coupon to print out once or twice a month. A few extra emails a month is a small price to pay to save a dollar or two.

Now, the thing to remember here is that you aren’t going to retire off of the money you’ll save. And, you certainly won’t be sending your kids to college with it either. But, saving money is saving money. A few dollars here, and a few dollars there all adds up in the grand scheme of things. Heck, maybe you clip coupons so that you can treat yourself once a week to that latte that you’re currently skipping.

Anything that can be done, has been done to an extreme. But, just because the extreme version of something is popular, doesn’t mean that it has to be the only way. Just like there are people who run extreme marathons of 100 miles or more, doesn’t mean that you can’t be a runner. Just because there are hyper-milers who squeeze every extra bit of MPG out of their cars, doesn’t mean that you can’t employ a few of the same methods to save a bit on gas. And, just because there are people who spend hours each week clipping, sorting, and analyzing coupons, doesn’t mean that you can’t spend a few minutes each Sunday to save a few bucks.

photo credit: sdc2027

The stores are already starting to advertise for the holidays, and several major retails are pushing the option of layaway as an option to finance your gift giving.  While layaway was not offered in stores for years, it is making a comeback due to the current economy.  You can choose to use layaway or not this year, though it is certainly a better option than financing gifts on credit cards, but why not also start your own layaway program?

One idea that revolutionized the way I budget is to set aside money each month for recurring expenses.  I used to be a teacher, and I could choose to teach classes in the summer or not.  Sometimes I did teach the classes, but a few summers I chose to take off, which also meant that I was choosing not to get a paycheck for three months of the year.  Considering I was the sole breadwinner at that time, summers could pack a painful punch.

However, I began to enjoy my summers off and not suffer financially when I began setting aside money for monthly expenses.  At the time, we required on average $2,500 a month to live, so that was $7,500 I needed during the summer months to survive without a paycheck.  I received a paycheck nine months of the year, so I automatically deducted $833 a month into a special account to live off of during the summer.

Even if you have a regular paycheck coming in all year long, you can benefit from this plan.  For instance,  I know that over the course of a year I would like to spend $500 on gifts.  Some months I may not spend anything, and other months I may spend $100 or more.  To make sure I have the money set aside, I would take $500 and divide it by 12.  Then I would put aside $42 a month for gifts.  It would be its own little gift fund, and I would draw from it when I needed to purchase gifts.

Likewise, my energy bill is very low in the winter because my landlord pays for the heat, but the electric bill is high in the summer because I have to pay to air condition or drafty apartment.  I set aside $50 a month for electricity.  During the winter months, my electric bill may only be $25.  The remainder of the $50 after I pay the monthly bill goes in savings in a special fund to help cover the high summer electric bills.

If you set your monthly budget up based not just on your exact expenses for that particular month but for the average you will spend all year long divided by 12, you essentially create your own layaway plan.  On months that may have higher expenses, you simply dip into the money you have already put aside.  This type of budget makes your monthly outflow much more stable and protects you from the highs and lows of creating a budget based on each month’s actual monthly expenses.

photo credit: robertstinnett

Have you ever watched your family open up Christmas gifts while mentally calculating how much each gift cost and comparing that against the amount you have in your checking?  Have you dreaded opening the bills in January because you know the credit card statement from holiday shopping will be coming soon and you do not have the money to pay the balance in full?
When my husband and I were newly married and dirt poor, we carefully planned our Christmas purchases to fit within our meager budget.  We didn’t buy many gifts, but the ones we bought were well thought out.  When we went to visit my mom over the holidays, she kept telling us about all of the presents she had bought for us.  There were so many under the tree!  Because we are the only people to buy gifts for my mom because my dad has passed, we started feeling guilty about the few presents we bought her.  Noticing that her bathroom towels were worn, we went out Christmas Eve night and bought her an entire set of 6 new bath towels including hand towels and washcloths with money we did not have.  Then we bought her some jewelry.  We charged everything knowing we didn’t have the money to pay.

On Christmas morning, she delighted in her presents.  When we opened ours, we were in for a surprise.  She too had bought a few well thought out gifts for us.  But all those extra gifts we found under the tree?  They were leftover t-shirts from a conference some of the professors had hosted at the university where she works.  She bought them for a $1 each.  Each time I or my husband opened another one of those presents that contained a t-shirt, I felt sick.  We had put ourselves in debt to try to make sure our presents were equal to hers, but she had stuck to her financial budget by giving us “filler” presents.  There had been no need to buy those extra gifts on Christmas Eve. . .

We worked like crazy selling off things in our apartment such as textbooks we no longer used so that we could pay off those credit cards used to buy the extra gifts.  On our meager salary, it took us until March.  Thankfully, we have learned our lesson.

If you don’t want to spend the months after Christmas worrying how you will pay off the new debt you just acquired, consider having a no spend month now.  We still have nearly three months until Christmas.  Pick a month such as October or November to drastically reduce your spending.

If you normally spend $1000 a month on groceries, gas, entertainment, eating out, toiletries, etc., decide how much you want to cut that amount.  Maybe you will decide that in October you will only spend $500 a month.  To make up the difference, perhaps you won’t eat out or you will eat from the pantry to use up those groceries that have been on the shelf for awhile.  Maybe you will do something for free as a family rather than catching the latest movie.

By reducing your spending for just 4 weeks, you will be able to come up with a good amount for your holiday gift giving.  If you normally spend $1000, but only spend $500 of that in October, you now have $500 saved for holiday gift buying.  Yes, you sacrifice now, but it will be well worth it when you know that every present under the tree has been paid for.  Best of all, there is no reason to dread the bills in January.  Isn’t that a great way to start the new year?

photo credit: kevin dooley