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This December Save Money with No Spend Days

November 11, 2019 By MelissaB Leave a Comment

While the holiday season often means seeing family and taking time off work, it is also typically a time of high expenses. In fact, you may spend more in December than you do any other month of the year. All of this spending can lead to a holiday hangover in January as you look at your empty bank account and credit card balance. But it doesn’t have to be this way. This December save money with no spend days. You’ll be so glad you did when January rolls around.

How to Implement No Spend Days

No spend days can be a great way to save money. December is a challenging financial month, so it’s best to start having one or two no spend days a week in November. By December, you’ll have accrued extra money to use in the most expensive month of the year.

What Is a No Spend Day

Save Money by Not Spending — Photo by Clay Banks on Unsplash

On a no spend day, you don’t buy anything. No morning coffee at the local shop; no online purchases, no matter how great the sale; no lunch out with coworkers; no stopping by the grocery store for a few items—you simply do not spend money on that day. If you want to stretch yourself, try it for two or three days in a row.

Why Have No Spend Days in December

There are several reasons to have a few no spend days in December.

Learn to Rein in Your Spending Impulses

Money gets away from us easily in December. We feel bad that we may not have spent as much on presents as we perceive others have spent, so we add on a few gifts. We may want to give the hostess of a party a nice bottle of wine. We may want to tip the hairdresser more generously. On and on throughout the month of December, there are little and not so little expenses that chip away at our money.

A no spend day or two allows you a chance to take a break from spending. When you take a break from spending, you reset your mind. After a no spend day or two, it’s a little bit easier to not spend as much money. It’s a little bit easier to ask yourself, “Do I really have to (or want to) buy this, or can I do without or wait?” You may find waiting leads to never buying it. When you check your buying impulse, it’s not so strong, and you can experience more self-control. If you do still want to buy the item, you may be more inclined to look for ways to buy it for less.

Start the New Year without A Holiday Debt Hangover

Wouldn’t it be great if, come January, you open your credit card bill and are not faced with charges you can’t pay off? Wouldn’t it be great if your bank account balance was still healthy come January? Wouldn’t it be great if you bought gifts in a disciplined, conscious way so when the holidays are over, you just feel good about the holiday season rather than suffering from a holiday hangover?

It is possible to have a controlled spending holiday season. One way to jump start this process is this December save money with no spend days. Try to have one or two per week this month.

How do you keep your budget in check during the holiday season? What strategies do you implement? Do you have no spend days throughout the month?

When Do You No Longer Need Life Insurance?

November 4, 2019 By MelissaB Leave a Comment

Life insurance is the most affordable peace of mind that I can think of. For usually less than $100 a month to cover both you and your spouse, you can rest easy knowing that if something happened to you or your significant other, your family would be taken care of. When you’re deeply grieving, you won’t need to worry about making a house payment or taking care of your kids. You and your family will be protected financially. But when do you no longer need life insurance?

Life insurance is meant to be a temporary measure. You shouldn’t need it forever, which is good because it gets significantly more expensive as you age. What gets a bit tricky is predicting how much life insurance you need and when you will no longer need it.

My husband and I bought life insurance 15 years ago, when our oldest child was just four months old. We got a 20 year policy, so our oldest will be nearly 20 when our policy expires. Our youngest will be just 14 then, so we are planning to buy another policy that will overlap our current one. We’re wrestling with the idea of just getting a 15 year policy or a 20 year policy.

If you’re like us, trying to decide how long you need life insurance coverage and how much you need, here are some variables you may want to consider:

How Long Do You Want to Cover Your Children?

You’ll definitely want to have insurance coverage until your youngest child turns 18. Many people decide to carry coverage until their youngest child is 22 or 23 because college can be so expensive. If you or your spouse dies, your child may need to rely on part of the life insurance money to help pay for the remainder of college.

When Do You No Longer Need Life Insurance? — Photo by John-Mark Smith on Unsplash

How Many Years Are Left on Your Mortgage?

While this variable may not affect how many years you want coverage, it may impact how much coverage you should have. You want to make sure you have enough life insurance to pay off your mortgage, plus more to cover other expenses.

Does Your Spouse Have a Medical Issue?

If your spouse will have trouble working thanks to a medical issue, you’ll want to carefully consider both the length of time you’ll need insurance and the amount. You’ll want to keep your coverage until you’re financially secure enough that your spouse will have enough money to survive even without life insurance.

Does Your Spouse Have a Career?

If your spouse has stayed home with the kids, how easily will he or she be able to re-enter the workforce if you die? Don’t take this lightly. Entering the workforce after a long break can be very difficult.

Mary is a family friend who is a stay-at-home mom. Her husband was killed in a car accident when he was only 32. Thanks to his life insurance policy, she was able to stay home with her children until they graduated high school. Because she invested the policy wisely, she never did re-enter the workforce. Instead, she volunteered in her free time.

How Much Debt Do You Have?

Again, this is a question of how much coverage you will have. In addition to your mortgage, you want to make sure there is enough life insurance to cover your remaining debts such as car loans, student loans, and credit cards. In many states, even if your spouse dies, you may still be held liable for these debts.

Choosing how much life insurance to get and for how long requires careful consideration. These questions should help you make the right choice.

Are there any other variables you use to consider how much and how long you should have life insurance?

Should You Create Sinking Funds Before You’re Debt Free?

October 21, 2019 By MelissaB 1 Comment

You have debt. A lot of debt. And now you want to pay it off, IMMEDIATELY! You’re fired up. You’ve read financial blogs, read debt payoff gurus books, and you’re setting up your budget. Should you create sinking funds before your debt free or put all of your money toward debt repayment?

What Are Sinking Funds?

If you’re new to budgeting, sinking funds are money you put aside for irregular expenses you know will come up during the year. Let’s say you spend $1,000 each Christmas, so you decide, in January, to set aside $83 a month in your Christmas sinking fund. When December rolls around, you have all of the money you need to pay for your Christmas gifts debt free.

Create Sinking Funds Before You Pay Off Debt? — Photo by Eugene Zhyvchik on Unsplash

The Argument Against Sinking Funds

Some argue that you shouldn’t set up sinking funds until you’re debt free. What is the point of putting $83 aside for Christmas when you’re paying 15% interest on your credit card? That $83 each month would be better served if you applied it to your credit card and reduced the balance and therefore the amount you’re paying in interest. You’ll get out of debt more quickly this way.

The Flaw With This Kind of Thinking

There is one major flaw with this kind of thinking. What will you do when you need to actually pay one of these irregular expenses?

I live in Arizona, and six months of the year, my air conditioner runs night and day. During those months, my electric bill ranges from $225 to $275, depending on how warm it is outside. Then there are about two months a year in flux when the electric is $125 to $175, and, in the winter, for four months, my electric settles down to $80 a month.

My budget can’t handle such big fluctuations in our electric bill, so every month, I set aside $150 for electric. When summer comes, I have a large sinking fund to help me pay for those hot months when the electric bill will be much higher than $150.

If I didn’t have a sinking fund, how would I pay for the high electric bill in July?

A Happy Compromise

I encourage everyone to set up sinking funds, even if you do have lots of debt. Part of getting out of debt (and staying out of debt) is changing your attitude toward money. What’s the use of putting all of your money on your debt if you have a $1,500 car repair, no money set aside, and you have to charge it and go further back in debt again? That’s not a budget roller coaster I want to be on.

But there is a compromise; if you have extra in the sinking fund after the event is over, apply that money to debt. For instance, let’s go back to the sinking fund of $1,000 at Christmas. Let’s say you’re conservative, shop the deals, and only end up spending $750 on Christmas presents. Great! Take that leftover $250 and apply it to debt. Then, in January start saving for the sinking fund again.

If you’re paying down debt, make sure to create and fund sinking funds. You won’t be sorry, and you’ll be changing your attitude toward money so when you get out of debt, you stay out of debt.

Do you create and fund sinking funds each month? If not, how do you handle it when large, unplanned or irregular expenses come up?