• How To Budget For Christmas

    Christmas spending derails many budgets but with planning and organization you can have a debt free and stress free Christmas this year.

    I love Christmas but in the past I had several that left me with a massive hangover from the anxiety and stress of spending too much on credit cards.

    I wasn’t full able to enjoy the season because I fell into the trap of consumerism and debt. It’s been years since that has happened buy I remember the stress that ruined several holidays and never plan to make that mistake again.

    Having a written plan and a budget is now crucial for me to enjoy the Christmas season. It saves me from stress and helps me get through the holidays debt free.

    Preparing for Christmas early instead of waiting for December to roll around has eliminated stress and debt from our lives.

    How To Budget & Save For Christmas

    Today I’m going to share our process for having a debt free Christmas and the printables I’ve created based on my Christmas planning process to get through the holiday season debt free.

    Start Planning Early

    The earlier you start planning for Christmas the more opportunities you have to cover all your bases and skip stressful last minute issues. We are starting our planning for Christmas right now in July and will start our actual Christmas savings plan next month in August.

    Set A Budget First

    Big key to having a successful debt free Christmas is creating a holiday budget. Several months before Christmas you should think of an amount you’ll need to accomplish all the fun activities and gift purchases. Another way to do this is set a spending limit for each gift and write out a list of all the people you have to buy for and work from there.

    Count out how many paychecks you have left til Christmas and set a goal amount of how much you will need to save per paycheck until Christmas.

    Start Saving Early

    Making Christmas into a sinking fund and saving early makes a huge difference. I start saving earlier and earlier each year and each time I move it up it makes it easier.

    If you start saving in January or even the week after Christmas then you have much more time and can contribute smaller amounts than if you start in October. This year we are planning to start our savings in August after our beach trip is over.

    The sooner you start saving the easier it is to take advantage of other tips like buying special gifts on sale throughout the year, because you already have the money available.

    Open a savings account just for the holidays. Open an account at Capital One 360 and you can get a bonus to use for the holidays to start your savings account. Then you can fund Christmas throughout the year each time you get paid or make extra money.

    Get Organized

    This Christmas planning bundle I made is based off all my old lists in my past planners. When thinking about planning ahead for Christmas I went back and looked at all the things I’ve created in my planner the last few years that we’ve had debt free Christmases. It helps so much to write everything down so you can plan out a budget for everything.

    how to save for christmas

    This is important for us because we always have a lot of people to buy gifts for at Christmas. I write down everyone’s name and then decide how much we want to spend on that person.  Writing everyone down and giving them a gift budget helps keep us organized and make sure we don’t overspend or forget anyone.

    I haven’t bought new decorations or wrapping supplies for a couple years now because I purchased a ton at 90% off one year after Christmas. This means my gift budget is larger than some people’s but my decor budget is really small. But having all the expenses planned out helps make sure it is all accounted for.

    One last thing I’d recommend is keeping track of the gifts you’ve bought for each person! I know some people who get so into buying things that they have given the wrong gifts to people because they didn’t stay organized or on budget.

    Cut Your Christmas Budget

    There are several ways to cut your gift budget in half.

    • Do a gift exchange with family where you draw names and only buy a gift for one person.
    • Look for great gifts throughout the year in clearance sections to score big savings.
    • Remember that not everyone needs or wants a gift so cut our gift giving where you can.
    • Use ebates if you shop online so you’ll get money back for things you are buying anyway.
    • Get creative and make gifts for people on your list. There are tons of easy things to make like homemade soaps, bath bombs, etc.
    • If you have a big group of people, make something in bulk that you can then split up. You can make a huge batch of cookies and deliver it in a cute Dollar Tree bin for example.

    Christmas Is About More Than Gifts

    When you are writing out your holiday budget remember that the season is more than just Christmas gifts.

    Remember that what really matters is spending time with the people that you love.

    The ultimate goal is to get through the holidays debt free, skip the stress and spend your time with your loved ones.

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  • 13 Sinking Fund Categories For Your Budget

    Sinking funds can change your life. They radically transformed our budgeting life once we started using them.

    You may be getting ready to start several funds now that you know how sinking funds work, but you don’t know exactly which categories you should be using. If you are wondering what sinking funds should you start then you are in the right place.

    Many people stumble in the beginning of budgeting with sinking funds but this list of common sinking funds can help you determine which sinking funds you need to make your budget work.

    What are sinking funds?

    Sinking funds are accounts with a purpose.

    They are accounts you save into regularly for spending on expenses that are irregular expense, non-monthly expenses, unpredictable or big one time expenses.

    It’s a mini savings account for an expense you know you’ll have in the future.

    Sinking funds make saving for these hard to budget items strategic and stress free. You set a little bit aside each month until you hit your goal… and then you spend it!

    So if you’re saving up for an event 6 months from now, you put a smaller amount aside into the sinking fund each month until the event where you spend it all. Sinking funds are designed to let you spend without stress or worry.

    Common Sinking Fund Categories

    Below are some of the most common and often most helpful sinking funds that you can add to your budget.

    1. Car Repair Sinking Fund

    Car repairs will eventually happen. Every car needs repairs at some point even if it’s just general tire rotations or oil changes. Maintenance on cars is a necessary expenses if you own a car.

    You need to be putting money into this car repairs sinking fund account each month so that you are ready when your car needs repairs. Even just $20 a month into this fund can add up and help with the car repairs that do come along.

    Without a car sinking fund these unexpected repairs can quickly sink your budget for a month.

    2. Car Replacement Sinking Fund

    Cars don’t last forever unfortunately. This means you’ll eventually need to replace your current car. Saving up a little bit every month into a car replacement fund will make the purchase of a new car much less painful and will prevent you from going into debt to get a new car when the time comes.

    If your current car is paid off you should be at least putting the amount of a regular car payment into your car replacement sinking fund. This will quickly build up when you are saving a payment instead of paying a payment toward a car loan!

    3. Home Repairs Sinking Fund

    Just like a car, you know your home will eventually need repairs. Because this is an expense that is inevitable, you need to be saving up for home repairs that will come along when you own a home.

    Most guidelines suggest you’ll have to pay 1% of the home value price on repairs each year. You can figure out this number based on your home’s value and then divide it by twelve to get an amount to save per month for your home repairs sinking fund.

    4. Water Bill Sinking Fund

    Many areas have annual or quarterly water bills where several months add up before payment is due. When these big, irregular water bills hit it is helpful to have the money in a sinking fund ready to pay the bill.

    Depending on you regular bill price, divide it by the number of months until it’s due and save that amount. You can also do this for other utility bills you may have that are not monthly.

    5. Pet Expenses Sinking Fund

    For most of us, pets are our family members. Our expensive, expensive family members who require monthly and larger annual expenses.

    Your pet may require regular grooming, special medicines for health issues, special diets and foods, and of course regular vet care. That’s not to mention anything like toys, doggy daycare, beds, clothing or any fun pet expenses. Add in an expensive emergency vet visit and you’ll definitely be glad you have a pet expense sinking fund.

    We put at least $50 a month into our pet fund which only covers a portion of these pet expenses but it still helps us manage our spending on our dogs.

    6. Christmas Sinking Fund

    Christmas happens every year so it should not catch you by surprise and lead you into debt. Your Christmas sinking fund can be for gifts but also for things like decor, Christmas cards, foods for special dinners or anything else for the holidays. 

    Saving for Christmas in a sinking fund makes it much less stressful around the holiday season. Planning out your Christmas gift list in advance and saving up for Christmas expenses will make it much less stressful during the holidays.

    If you’re not sure where to start with planning and saving for Christmas, you can grab the Christmas budgeting planner from my shop or the Christmas savings tracker to help visually plan your savings.

    7. Gifts Sinking Fund

    Throughout the year we buy gifts for birthdays, weddings, holidays, baby showers, house warmings and more special occasions. While we love gifting those around us with things they will treasure, it can definitely add up and ruin the budget if we don’t plan for it!

    Because we still want to give our loves ones gifts, we made a sinking fund for gift giving! We put a little bit into our gifts sinking fund each month and it usually builds up so we can buy gifts when they are needed. Having a sinking fund that builds up allows us to never stress about giving gifts.

    8. Clothing Sinking Fund

    You might not buy clothes every month, but you will eventually need to buy clothing or shoes as items wear out. Hardly any clothing pieces last a lifetime so you’ll need to plan for buying new clothes and shoes at a certain point.

    That’s why this is a great sinking fund category because you are going to need it even if you don’t need it monthly. You can save up a little each month and then eventually buy a higher quality item when you are ready to shop and replace items.

    9. Travel Sinking Fund

    Travel is generally a high price tag item which is why many people create a travel sinking fund to save up for trips. If you save just $100 a month into a travel sinking fund then you can take a $1,200 vacation each year. $100 a month doesn’t seem like much but it’s amazing what you can do with that amount. If you want to travel more or go on better trips then you can increase the amount you save monthly.

    For us, vacations are usually once or twice a year but because the high price tag, they are great sinking fund candidates. We only save when we have a trip planned and know the cost but many people save up a certain amount each more dedicated toward trips.

    travel sinking fund

    10. Car & Life Insurance Bill Sinking Funds

    Many life insurance bills and car insurance bills are due every 6 months, quarterly or yearly. Because they are not a monthly expense, these bills can throw a wrench into a normal monthly budget.

    We pay our car insurance every six months, so we put $55 a month into a car insurance sinking fund. Then when the payment is due we withdraw the amount, pay the bill, and start over again! We do the same thing with our life insurance because our life insurance is due quarterly. We put away $35 a month for that quarterly bill and then pay it when the balance has built up.

    11. Medical Bills Sinking Fund

    Unfortunately medical bills can be a huge financial problem in the United States. Even with good insurance you can have co-pays for appointments, shots, or medications to pay for when you do get sick or hurt. While this is unfortunate, it is also a reality of the world we live in.

    A sinking fund (or a medical FSA or HSA) can help make these irregular costs more manageable when they come along. If you have a very high deductible you need to be saving each month into a sinking fund for medical expenses that could come up. Your life will be much less stressful if you have the money saved when a medical emergency strikes.

    12. Back To School Expenses Sinking Fund 

    If you have kids, then you probably want a “back to school” sinking fund. You’ll need clothes and school supplies when school season rolls around. Kids also have a lot of expenses for signing up for extracurricular activities at the start of the school year.

    Back to school can be expensive, especially if you have multiple children to buy for each year. To soften the blow you can save up a little bit each month and you’ll be ready once school runs around.

    13. Yearly Renewal Sinking Funds

    If you have memberships or subscriptions that renew yearly, they can be put into a yearly sinking funds account. Things like a Costco membership fee, zoo membership fee, Amazon Prime membership are all items that can wreck a monthly budget so saving up for them each month can help keep you on track.

    You can create individual sinking funds for each yearly expense item or you can create a “yearly expenses” account where you add up the amount of all items, divide by 12, and save that amount each month.

    How do you set up sinking funds?

    Setting up sinking funds with Capital One 360 is very easy and super quick! From start to finish they have made the process of setting up sinking fund savings accounts very easy.

    If you want to see how we set up our sinking funds, you can see the whole process in the video below.

    Setting up sinking funds is a great way to keep your budget together throughout the year so the ups and downs don’t derail you.

    Find What Works For You

    Once you have set up sinking funds with Capital One 360 you are able to play with the categories you use for your own life. There is no list of sinking funds that will be perfect for you – you have to play around and find which categories you need to use to make your life easier.

    You may even want to start with just one sinking fund category to save for and then go from there! One great category to start with can be car repairs or car related expenses. These are irregular expenses that come up for everyone as some time but can be hard to predict.

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  • How To Set Up Sinking Funds | Sinking Funds 101

    Sinking funds seem confusing when you’re new to budgeting, but they actually make budgeting easier!

    Since we started using sinking funds we have had less problems with our budget being ruined by unexpected expenses. Sinking funds have alleviated stress from budgeting and made it much easier to pay for items in cash upfront and not rely on debt.

    Today I’m sharing what sinking funds are, why I love sinking funds, how to set up your sinking funds, and how to figure out what to save in sinking funds. I even show you how we set up our sinking funds at Capital One 360  in our own accounts!

    Sinking funds truly can be a total game changer once you understand them! They can be pretty hard to understand at first when you start using sinking funds but they can revolutionize your financial life which is why I wanted to explain sinking funds in an easy way.

    Dave Ramsey fans will talk about sinking funds a lot so hopefully this video explains what sinking funds are and how you can set up your own!

    Typical sinking fund categories might include things like car repairs, home repairs, holidays, Christmas, gifts. I’ve also shared a lit of 13 common sinking fund categories.

    What are sinking funds?

    Sinking funds are accounts with a purpose. They are specific savings accounts designed to achieve a purpose.

    They are accounts you save money into regularly for spending on expenses that are yearly irregular expenses, non-monthly expenses, unpredictable or big one time expenses.

    It’s a mini savings account you create for an expense you know you’ll have in the future whether it is planned or unplanned.

    Sinking funds make saving for hard to budget items strategic and stress free. You set a little bit aside each month until you hit your goal… and then you spend it!

    You get to spend guilt free because you saved up the money for a specific purpose, so when you spend the money on that item you don’t have any guilt attached!

    Using sinking funds is easy. Let’s say you are saving up for an event 6 months from now. You put a smaller amount of money aside into the sinking fund each month until the event where you spend it all.

    Sinking funds are designed to let you spend without stress or worry.

    Types of Sinking Funds

    In general I’ve seen there are a few common ways to set up sinking funds.

    1. Cash envelopes sinking funds. Since a sinking fund is money you will be spending, it makes sense to sometimes do them in cash. For these you can use cash envelopes or a more secure set up like a safe.
    2. Multiple savings accounts. You can set up multiple accounts with some banks like Capital One 360 and give each sinking fund it’s own account. This is my preferred method.
    3. One savings account with a spreadsheet. Many people like to put away money into one big savings account but then track what everything is assigned to with a spreadsheet or app.

    Whichever way you decide to set up you accounts, the point is to save for those expenses that would otherwise stress your budget.

    In the video I show you our sinking funds and how we’ve got them set up in Capital One 360 where we keep our savings. I’ll also be opening new sinking funds so you can see how that works.

    How do you set up sinking funds?

    Setting up sinking funds with Capital One 360 is very easy and super quick! You can complete the whole process in less than 10 minutes in most cases.

    If you want to see how we set up our sinking funds, you can see the whole process in the video below. I walk you through everything you need to know about sinking funds, from how to set them up to how to give them nicknames that match your budget.

    If you want to open your own Capital One 360 you can use my referral link for a $25 bonus when you open an account with at least $250.

    Getting a jumpstart on your savings with a little extra cash added to your account is a great bonus!

    What sinking funds should I set up?

    In general you should look at your life and consider using sinking funds for things that are unusual budget items.

    This includes:

    1. Large one time purchases like a new car or your vacation.
    2. Yearly or quarterly bills that aren’t paid each month like life insurance or car insurance.
    3. Yearly expenses you are expecting but only happen once like Christmas or new clothes at the start of the school year.
    4. Unexpected expenses that you know will happen but you don’t know when like car repairs.

    These are the common types of expenses you can make stress free by using sinking funds. An easy way to find the expensive events you might want to start a sinking fund for is go through the last year of expenses and see where big bills hit and where you struggled to cover something during a normal month’s budget. These things might need to be sinking funds for you.

    By contributing to sinking funds each month from your normal budget you can handle these expenses that are hard to budget for and never touch your emergency fund or go into debt.

    Common Sinking Fund Categories

    I’ve previously shared 13 sinking funds you must use and there are many other common sinking fund you might want to try. Common categories include:

    • Car replacement
    • Car maintenance & repairs
    • Car insurance
    • Car tags
    • Home maintenance & repairs
    • Home decor
    • Furniture
    • Vacations
    • Medical expenses
    • Dental expenses
    • Pet expenses
    • Kid expenses
    • Clothes
    • Gifts
    • Birthdays
    • Christmas
    • Holidays
    • Life insurance
    • Annual bills

    The sinking funds you decide to set up will be based on your life stage and what events you have happening.

    Some, like saving for Christmas or planning for car repairs, will apply to most people.

    How do you calculate the amount to save in sinking funds?

    One way to guesstimate the amount to save in sinking funds for unexpected expenses like car repairs is to look back at your spending over the last year. How many times did you car need repairs? How many times did you get your oil changed? Add all of that up and divide it by 12 for an amount to save monthly for estimated car repairs.

    If you anticipate any large repairs in the future you can get quotes for how much it might cost and then divide that amount by months or paychecks to determine how much extra you need to save.

    When you have a specific date for an event or bill it is much easier to determine the amount to save monthly or by paycheck. You simply take the amount you need for the event or bill and divide it by the number or months or paychecks until you need the money.

    To find out how much you need to save, you would take the total needed for the event and divide it by the amount of time until the event. In the example of this event if you needed $1,000 you would save $166.66 a month or if you got paid bimothly you would save $83.30 per paycheck (2 paychecks per month for 6 months).

    If you are a visual person like I am, then it might help to have a coloring tracker to visualize your progress saving with sinking funds. My Etsy shop has a variety of savings goal trackers and sinking fund tracker tools.

    How do you get money out of sinking funds?

    One questions I’ve commonly been asked about setting up sinking funds with Capital One 360 is how do you get your money out from the account? Since many traditional banks make this process complicated it is easy to wonder how you actually get the money out of your sinking funds in order to use it.

    With my sinking funds at Capital One I simply transfer the money back to my checking account when I’m ready to use my debit card. When I know the final amount for the purchase I move the money over instantly and then swipe my debit card. This process is what works for us.

    The only downside to this is that the number of transactions moving money from one savings account back to a checking account is limited to 6 per month. This hasn’t been an issue for us since we normally only use the sinking funds once or at most twice in a single month. If you are saving in a sinking fund in an online account it should probably be for thinks you aren’t spending on frequently. If you are spending in the category often it might just need to be a cash envelope category in your budget.

    Why do I use Capital One 360 for my sinking funds?

    I’ve been using my Capital One 360 account since before it was Capital One 360. It was originally ING Direct but they did such an amazing job that Capital One bought them. Ultimately they changed the branding but kept all of the things that made the bank account awesome in the first place.

    I share my referral link in this post because I’ve been a customer for over a decade now and I’ve only had good experiences with the account. The customer service has always been excellent, there are no overdraft or gotcha fees, and moving money is quick and easy.

    There are plenty of other banks that also offer high yield savings accounts perfect for sinking funds. If your bank doesn’t offer it, check out online banks like the ones I’ve reviewed here or peek around the site for reviews on other savings accounts perfect for sinking funds.

    How to include sinking funds in your budget

    Once you are budgeting regularly it is an easy task to include sinking funds into your routine budget. The great thing is that planning for these bigger and unexpected expenses in advance means you’ll be unlikely to ruin a budget in the future because of those pesky expenses.

    Once you’ve got the sinking fund categories you want to save for, you’ll figure out the amount you want to save per month and include that in your monthly budget. Because you are saving for things in small chunks instead of all at once it is easy to include these in your budget.

    Remember that sinking funds are separate from your emergency fund. While there may seem to be some overlap, sinking funds are for planned expenses or irregular expenses you know will be coming. While things like car repairs may seem like unexpected emergencies, they are actually expenses you should expect to come every once in a while since all cars need maintenance.

    True medical conditions and extensive home repairs that take you by surprise can fall under your emergency fund.

    Start Your Sinking Funds Today

    Sinking funds can help you save for large expenses and keep you from wrecking your budget entirely when something unexpected comes up.

    Sinking funds also give you the freedom to spend guilt free on bigger items because you’ve already saved up for them.

    Sinking funds are pretty much the best thing ever! Once you’ve gotten started using sinking funds in your budget it will be hard to stop.

    If you have not already started your sinking funds, then what are you waiting for?

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