Part II: Debt Free Christmas 2020

By Deb Poissant

Hopefully, your Christmas 2019 debt is melting away faster than spring snow. You reflected on the past holiday season and decided what you would like to keep and what to let go of. You have created a plan to eliminate your debt and found some extra money to throw at your debt. Congratulations on your progress! Let’s get intentional about next year’s Christmas. Debt Free Christmas 2020 here we come!
Back in the old days there were Christmas clubs, so essentially, we are creating our own Christmas club. The technical term is a “sinking fund,” which is a fancy name for money set aside for a specific purpose. Our purpose is to have enough money saved by Thanksgiving to pay for our Christmas expenses.

First you will want to make a separate savings account just for Christmas. You can set up the account with another bank if you think you might be tempted to use the money for other things. Now that we?have  our account let’s determine how much we need to save.

Let’s figure out how to put money aside each payday, so that you will have the amount needed for Christmas 2020 by Thanksgiving. You may be thinking “Why Thanksgiving instead of Christmas?” Well, glad you asked. You will have eliminated the stress of worrying about how you are going to pay for all this. Now you can focus on the holidays knowing that this year Christmas is paid for!

So, get out your calendar. Count the number of paychecks left until Thanksgiving. Take the amount you plan to spend on Christmas and divide it by the number of paychecks left until Thanksgiving. Don’t despair if your paycheck is too small. Spoiler alert: Step four has you covered. Have that amount automatically transferred into your Christmas account each payday. You have now created and funded your Christmas Sinking Fund.
Grab your list you created of what you decided you were going to keep for Christmas 2020. This list will determine how much you will spend on the holidays this year. Use your bank statements, credit card statements, or anything else that will help you put a dollar amount next to each item.

Now, decide if there is anything that you really want to let go of but realistically you know in the back of your head that it will happen in Christmas 2020. It could be things like the office Secret Santa or the family Yankee Swap. Something that you might not want to be left out of so you end up participating. Add that to the Christmas 2020 spending plan

Add up everything on your list. Congratulations! You now have the grand total of your Christmas 2020 spending plan.
Do you throw your hands up in despair? Oh Contraire. Breathe in and out and commence by asking yourself some key questions. The first is: “What can I afford?” Even $5 gets the ball rolling. You will be $5 closer than you would be otherwise. Let’s ask some more questions since calling the holidays off doesn’t seem like an option. Can you find a way to earn more money? Are there other funds that I can divert to the Christmas account? Search for extra money such as a tax refund. Try getting rebates on things you already buy with an app like Rakuten. Still not enough? Then you need to reevaluate. How can I scale back on festivities but still enjoy celebrating the holidays? Try not to be discouraged, you will get there! Progress is sometimes slow but remember you are moving in the right direction.
Sinking funds allow you to add some fun in your budget too or help you be prepared for the expenses that sneak up on you. Sinking funds can be used for exciting things like summer camp or a trip to Disney. They can also be used for unexpected car repairs, car insurance or heating our homes in the winter.
It’s as easy as 1, 2, 3.  Let’s summarize. First create an account for a specific purpose. Second, determine how much you will need in the account on a certain date. Lastly, determine how much money to deposit each payday. Divide the grand total needed by the number of paychecks you will receive. You may need to reevaluate if the “per paycheck” amount is too large. Automatically have the funds deposited every paycheck into the sinking fund you set up.

Deb Poissant is an explorer, friend, wife, mother and teacher. She started an adventure of wiping out debt and living within her means while in college. The journey continued when she went down to a one-income family as she took a sabbatical to home-school her son. Now, almost ten years later, another adventure begins!