Monday, December 29, 2008

Saving for Christmas

Now that the finish line's been reached, it's time to start the race.

The race to having Christmas gift-giving handled financially, I mean.

Readers should know by now that I am a devout follower of Mary Hunt's Freedom Account principles. I have preached this idea from the blog-tops, and will continue to do so. The concept has literally improved my life.

Good financial habits are golden. I cannot overstate the importance of making a habit of saving up for expenses that you know will arrive in the future. Smart folks save up for the known as well as the unknown.

Christmas, it just so happens, is a perfect example of a known expense.

Barring some really staggering developments, Christmas is going to happen on next December 25, too. If your Christmas, like mine, involves spending money, then you should be preparing for this right now.

Here's what I've figured out: During recent years, my household has spent roughly $1k per year on gifts. This includes Christmas, birthdays, and other incidental gift-giving expenses. Therefore, I've made it an iron-clad habit to set aside $80 per month for just this purpose. (Well, this gets me to $960, which is close enough for our needs.)

"Prepaid" gift expenses such as this aren't the only funds I keep in my Freedom Account and add to on a monthly basis. Our life-insurance dues (billed annually) are there, too, as well as car-insurance premiums (paid every six months) and our ADT alarm service (every three months). There are more, but you get the picture. These are expenses we know will be coming. It only makes sense to ensure that we'll have the money ready to go when the actual bill arrives.

The point is this: Your life will be measurably better if you treat known future expenses as monthly bills now, and save up for them on a monthly (or weekly) basis.

When other families are stressing over Christmas bills, yours will be as carefree as Frosty in deep freeze. With those Freedom Account savings in place, there'll be no need for debt — and therefore, money worries — to ever enter the picture.

Where Do I Keep My Freedom Account?
Answer: ING Direct!

Click here to start saving with ING DIRECT!

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— Posted by Michael @ 9:06 AM


Thank you for pointing out that Christmas is an expense you can plan for! Every year I hear "it snuck up on me"

HOW IN THE WORLD COULD THAT HAPPEN? It's every December 25th, every year, without fail - plan for it people!


Agree very much about predicting expenses and budgeting in advance. In the UK, a large number of people are still paying for last year's Xmas on their credit cards!

Keep up the good work!


I pull money from our tax return every year... I should change our withholdings and just save them money from each paycheck, but I dont. I file in early Feb, get my money back by early March, and put it in my e*trade savings for 9 months, currently at 3.3%. The challenge for me is finding the right gift for everyone at a price that leaves me with money in my pocket... which then gets split between my play money pile and my retirement savings.

** Comments Closed on this Post **

Thoughts on my personal finances, goals, experiences, motivations, and accomplishments (or lack thereof).

My financial life began turning around when I took responsibility for it.
— Dave Ramsey


Start (2005-12): ~$21,900
Currently: $0
[About Our Debt Paydown]


Savings Goal: $15,000
Currently: ~$15,115
[About Our Liquid Savings Goal]