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Friday, December 28, 2007

Zen Through Better Budgeting...

It has been three full days since Christmas morn and I feel something strange. A much lower stress level! I was asking myself, why I was truly not stressed out Christmas Night. Then it hit me, it was through better budgeting, managing our bills and cash management. I just wasn't as stressed out as usual Christmas night.

"It is all paid for!" I told myself. I have made it through the month of December actually lowering my indebtedness rather than adding to the pile. There are NO bills coming in January, as we saved and paid for everything in cash. In fact we have begun (albeit slowly) to save for next Christmas.

Here is how we did it this year:

When we decided to get real with ourselves, one of the realisations was, " What will we do about Christmas this year?" We just couldn't do what we had before and rack up huge credit card bills. One we cut them ALL up, except our debt card. And secondly we wanted off that Tilt-a-Whirl of Doom.

So the next step was to determine how much we wanted to spend in total (a top-down approach) then we said here is our list of people we usually shop for along with us and the kids. At first it worked out to about ,47 cents per person...a bit low. So we went and paired the list to who really was close to us. With having 3 kids, it was still below what we wanted to do so we made two categories of people, Us and Them (pretty original, huh). We came up with a budget per person for the Us category and a pool of funds for the Them's (my English teacher would kill me if he saw that statement...).

The next step was harder, we talked with the kids about expectation level, which we had set WAY too high up until now. We then asked them for their list and reminded them their fate was in their own hands. If they wanted a big gift...that was probably it, or they could have a series of smaller gifts.

We also dropped another bomb...we wouldn't give them money to shop for us or each other, but we expected them to at least shop for each other and established a minimum present price of $5 on each. This price floor avoided my middle Daughter (who will never be broke) from buying a pencil for each of her siblings which was her first offer! She is why the rule was established! Since we started this discussion at the end of September they had plenty of time to save.

Next...the Them's...They are all really good people, but they aren't my kids or wife so they are lower priority. We wracked our brains for what to do here, then we decided to have family pictures shot and given out as many had asked for these. To be fair ,we warned all that we were doing something like this so we could avoid the big gift vs small gift possibility. We also asked those Them's to focus on the kids if they were to buy presents at all, or to do exactly what we did, as we would love to get family pics from them as well.

Now the test...we've saved the money, taken out cash so we couldn't go over, then prepped our list. In order to keep track of what was who's money we separated the money in a bigger envelope with 3x5 cards with the gift receivers name. This kept us fair between the kids, and if we did want to go over, we have to take it out right then, from someone else's present money. This avoided many prior years issues of going over on one, then making up to the other, now #3 wasn't balanced...a never-ending spend spiral!

So how'd we do? Exactly on budget (well, actually a received a gift-card from work so I went over on her, but I used the gift card to do it!). We managed our money, we kept to cash so it was easy to track, and everybody had a great Christmas. Oh yeah, and it looks like we reduced our debt this month by $2,940!

All I can say is this worked for us, we are planning to do the same every year and enjoy our Zen...


Kansas Simplicity said...

This is a great accomplishment for you and your family. I think the holidays can be filled with stress and expectations or more, more and more which creates the debt trap. Kudos to you and your family for making a difference and avoiding the debt trap this year and staying on progress with your goals while having a great holiday.

RacerX said...

Thanks. It really is the small victories, like surviving Christmas, that make you feel you can reach your end goals!

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