How Much Did You Spend On Gifts This Holiday Season?

I hope everyone had a great time this past week and enjoyed spending time with their friends and families!

Christmas is in the rear view mirror and the new year is just days away.

Over the last week, people were reminiscing about the past and in just a couple of days people will be planning for the future.

Now is the time that people start thinking about getting serious about their finances and other goals for the next year.

In that spirit, I thought I’d ask a couple of very telling questions about your spending over the last few weeks.

How Much Did You Spend On Gifts This Holiday Season?

The first question everyone should ask themselves is how much they spent on gifts and other holiday items this year. We spent about $80 for gifts this year. We ended up doing a Secret Santa exchange rather than full blown gifts for everyone like we normally do.

The Secret Santa exchange resulted in us spending just about as much as we normally would have spent anyway. However, instead of buying smaller gifts for more people, we each only had to buy one gift for one person.

This allowed us to spend a little more and get the person something we really though they’d enjoy.

If you’re not sure how much you spent this year, or if you’re scared to know, take a few minutes and log into your bank account and credit cards and tally everything up. I’ll wait a couple minutes for you to do that.

When you’re done, come back here and take a look at the next question.

I’m waiting…

How Much Did You Budget To Spend On Gifts This Holiday Season?

If you just glanced at the question above, you might think it is exactly the same as the first question I asked. However, they’re very different questions. So, how much did you budget to spend?

Did you even come up with a budget for holiday spending this year? 

Hopefully you did create a budget and hopefully you spent less than or exactly what you had budgeted to spend this year. If you did, congratulations!

If you didn’t, there isn’t any point in beating yourself up over it. The past is the past, but you can learn something from this year.

How To Not Overspend For The Next Holiday Season

Maybe you didn’t budget enough for this past year or you didn’t budget at all. That’s a totally acceptable answer, as long as it is the truth! Let’s fix this problem so it doesn’t happen again.

Go ahead an estimate how much you’ll need next year right now while this year’s spending is fresh on your mind. Be realistic, if you know you won’t really stick with that small Christmas you told everyone you were going to have next year, budget for a typical Christmas.

Once you know how much you want to spend next year, add 10% as a contingency in case something pops up. If you don’t spend it, great, but it will be there if you need it.

Divide the total by how many paychecks until next Christmas and then set aside that much money from every single paycheck in a bank account you can’t and won’t touch until you start buying gifts for next year.

Whatever you do, next year make sure you don’t spend more than you’ve budgeted.

If you can do that, this year’s overspending will have been a great lesson that you’ll hopefully never have to learn again. Don’t overspend your budget for holiday gifts! Chances are, one year from now, most people won’t remember what you bought them.

Sad, but true.

So, how much did you spend? How much did you budget? What will you change for next year? I want to know how your financial holiday season went. Let me know in the comments below!

Is There Such A Thing As a Normal Budget Month?

Looking back on our finances from previous years has really made me wonder if there is such a thing as a normal budget month anymore.

For instance, in just one year Tori started the year on disability due to her first foot surgery, went back to work, then went back on disability again for her second foot surgeryOur income that year was anything but normal.

Once you added in our side income, which varied greatly from month to month, it was pretty difficult to predict our income for any given month that year.

Of course, income is just one line item of your budget, or maybe a couple lines depending on how you break it out.

Where things were all over the place for us that year was the expense side of our budget. Why? Everything under the sun popped up as irregular spending month after month. What am I talking about? Let’s dig in!

Purchasing Our New House

The first three months of this particular year were a blur as we looked for a new house and dealt with all of the costs associated with buying a property.

Looking for a house didn’t cost hardly anything. That said, we were saving like crazy to be able to have enough cash. We needed money for the down payment and closing costs to secure a conventional loan without touching our emergency fund.

Once we found a house, the transaction costs added up quickly.

Between surveys, home inspections, various closing costs and the down payment itself, we bled cash like crazy in the beginning of the year. We had planned for it all, but those definitely were not normal budget months.

Foot Surgery #2

Foot surgery #2 was an unplanned surgery and a complete surprise to us after Tori’s first surgery failed.

This hit us in the income category (since we only got 80% of her employer stated hours which were just 83% of a full time employee) and in the expense category, as we hadn’t planned for another surgery with her flexible spending account (FSA).

This was a bummer because we didn’t have the money in a tax free account. On top of that, we had to pay for all of the co-pays, deductibles and other medical and insurance costs out of a smaller income.

Rental Property Costs

After we moved into our new house we had to fix up our old house in order to rent it out. There was a lot of time and a good chunk of money that went into this endeavor, but it paid dividends (actually, rent) quickly.

Wedding Costs

To make things even more complex, we decided to get married in the year in question. Thankfully we were able to keep our total wedding costs, including the rings, to just under $5,000. However, that didn’t include the honeymoon.

Honeymoon Costs

The honeymoon was the next item on our list that made yet another month an abnormal budget month. We had a pretty awesome honeymoon and you can read about how much our trip cost starting in this post.

What Is The Lesson?

The lesson we have learned from that year is that life happens, sometimes when you least expect it. While we had planned a few items on this list, others were more spontaneous.

When it rains in Florida, it pours. That’s exactly what has happened during this particular year with our expenses!

How Survived That Year

There are two key things we did to survive that particular year. The first was spending significantly less than we earned. This allowed us to have a huge cash flow surplus every month to deal with extra expenses.

The second was we saved our cash surplus in months where we didn’t need it. Whether we saved it in a targeted fund for our wedding, our honeymoon, a general purpose cash fund or our emergency fund, we saved for the future. We’re so glad we did.

Is there such thing as a normal budget month? Are your expenses always similar every month? How do you handle the odd months?

How To Split Expenses with Roommates, Spouses and Family

how to split bills with roommatesSplitting expenses is a often a touchy topic when you’re living with a significant other, roommates or family.

If everyone doesn’t agree it can get pretty nasty fast.

There are a few ways to split expenses between yourself and those you live with but I’m going to highlight four of the most common ways today.

Splitting expenses really isn’t an issue if you’re living with your significant other, husband or wife and have combined finances.

However, a lot of people keep separate finances when they’re dating (as we did) and some continue this after they get married (we did not).

Want to know how my wife and I used to split our expenses when we were dating? Make sure you read through to the end of the post.

Split Expenses Equally

Splitting expenses equally is the easiest method to calculate because all you do is simply divide the expense by however many people will be paying for it. While it is easy to calculate, that doesn’t mean it is going to be a popular decision.

This method can work well for items that get equal use such as parking. It seems to work well for spouses or significant others living together because it is simple and doesn’t require a lot of thought.

It doesn’t always work as well for roommates or family living together though because use of the item being paid for is not always used equally by everyone.

Split Expenses Based on Usage

Splitting expenses based on usage makes a lot of sense from a practical standpoint but it doesn’t always sit well with the people you share living space with. It can also be extremely difficult to calculate.

This method is great when you have roommates. I had two roommates in a three bedroom apartment once and we used this method often. The bedroom sizes in the apartment were not equal so it didn’t make sense to split the rent equally.

Another expense this worked well for was our cable bill. We each had different cable receivers in our bedrooms. The receivers had different costs so we split the cable bill based on each individual roommate’s use.

This didn’t work for food expenses because we couldn’t measure consumption accurately. Instead we all bought our own groceries and asked if we wanted to use some of our roommate’s food.

We couldn’t split the electricity bill based on usage either but I think the only reason we didn’t do this because we couldn’t have individual meters on all of our outlets! I’m joking… only to a point. One of my roommates probably would have liked splitting the electric bill based on usage.

Split Expenses Based on Income

Splitting expenses based on income seems to be popular among spouses and significant others. Incomes can be very different in some relationships and some people feel it is fair to split expenses based on the ratio of income between the people living together.

For instance, if a boyfriend and girlfriend who lived together made $25,000 and $75,000 respectively then shared expenses would be paid 25% by the boyfriend and 75% by the girlfriend. Bills like rent, utilities, and groceries can all be easily split this way.

This might not make as much sense if you are splitting bills with roommates but could work if you’re living with multiple generations of family.

It could cause some arguments when it comes to expenses that are solely for one person. For instance, if a couple each owns their own cars and drove their car exclusively it might not make much sense to split that expense according to income.

If you use some common sense and only split expenses that are actually shared this might work out for your situation.

Contribute What You Can

The method of contributing what you can is normally what ends up happening when family is forced to live together or a spouse or roommate loses a job.

It takes a very generous person (the person paying the bigger share) and an honest person (the person contributing what they can) to make this work without resentment.

This is rarely a planned method of splitting expenses and it requires a lot of effort by both parties. Normally this works best if you set some ground rules.

If a person is just contributing what they can, any spending that isn’t paid toward shared expenses can cause an argument.

If a person hasn’t contributed to rent but instead purchased a new piece of jewelry arguments could be right around the corner.

How We Split Our Expenses

We have split our expenses a few different ways over the years. We changed our methods based on what made the most sense for us at the time.

When we were dating and both in college I’d pay for our dates (for the most part) and we’d each pay for our own gas to visit each other since we went to different colleges. We split our expenses equally during this time period.

I then graduated from college and was working full time while my then girlfriend remained in college. During this time I paid for most of the expenses and my girlfriend would pay for some smaller expenses because she was contributing what she could.

I’d often pay her for her gas money to come visit so it wouldn’t add to her student loans. During this time period we used the contribute what you can method.

Before we were married, but when we were both in the same place and lived together we split our expenses equally. We didn’t make the same amount of money but we felt this is the best way to split the expenses at this time.

We had a very low total cost in regards to shared bills, partially thanks to our townhouse we bought on a whim, and could both handle the amount of expense without any financial difficulty at the time.

We kept our finances separate since we weren’t married. However, splitting expenses is no longer an issue because we got married and we now combine our finances!

Do you live with roommates, a significant other, or family? How do you split the expenses in your household? What works and what doesn’t? Share as much detail as you feel comfortable doing so we can understand why different methods work for different people and different situations!

Photo by: Images_of_Money Text added by: Lance Cothern

Could You Eat On $125 Or Less Per Month? This Guy Did!

could you eat on 125 or less per monthLast week I read a story about a person who took the SNAP challenge of spending $125 or less on food in a month.

In addition to spending less than $125, the participant could only eat food purchased during the month.

That means no stocking up your pantry the month before.

The participant was supposed to avoid free food since not everyone has the same opportunities to access free food.

For instance, if your workplace offers free lunch, not everyone has that same benefit so you couldn’t accept the free lunch.

Finally, the challenge says you should eat as healthy as possible.

Could You Eat On Less Than $125 For A Month?

The answer is yes! The person in the original story easily accomplished the goal with a few dollars to spare and I feel almost anyone without dietary restrictions could do the same.

Would the challenge be fun? No. Would you be eating like royalty? Not a chance. Will it be easy and convenient to complete the challenge? Definitely not. However, it can be done.

Things You Must Sacrifice When On A Tight Food Budget

When you’re on a tight food budget, you can’t eat like you normally would. In fact, you may have to drastically alter your eating habits.

You Simply Cannot Eat Out

If you normally eat out, whether it be once a day or once a week, you won’t be able to afford the luxury of having someone else serve you prepared food on this challenge.

Is not dining out really a sacrifice though? Many of the meals you would eat at restaurants or prepared food delis probably isn’t super healthy for you.

Shopping At Just One Store? Not Happening

If you normally shop for everything at one time in one store, that may not be possible on this challenge. You will probably have to shop at multiple stores. You’ll have to know what is on sale or cheap at one store versus the next if you want to maximize your $125.

Don’t Use Coupons? You Do Now!

You may even have to use coupons to make food as affordable as possible. While I am not a huge coupon fan, if I had to live on a food budget of $125 a month, I would seriously consider using coupons because every single dollar saved would count.

Your Diet Will Change

Your diet won’t likely be the diet you’re used to. Meat is expensive, but there are other cheaper ways to get protein in your diet. Fresh vegetables that are out of season will be outrageously expensive compared to the small food budget and won’t be an option.

You’ll have to stick with in season produce to get the biggest bang for your buck. If you love a fancy or expensive version of produce, chances are you’ll have to downgrade to the common version. Organic foods probably won’t be an option, either.

Food May Be More Bland And Variety Could Disappear

Due to the fact that you can’t use foods you already had, you probably won’t be able to buy a lot of spices and flavorings. That could easily lead to much blander food than you’re used to eating.

In addition, because of the cost restraint, you may have to end up eating a lot of the same foods over and over because food waste will have to be kept to a minimum.

Convenience Foods No Longer Make Sense

Remember all of those foods you just simply pick up from your local deli? They’re hot, ready to serve and likely won’t fit in your monthly food budget. Same thing goes for those prepackaged pizzas you have to simply pop in the oven.

Instead of buying canned beans, if you even bought beans, you’ll likely now have to purchase dry beans because you get so much more food for your money. Yes, you’ll have to plan ahead and soak the dry beans overnight, but they’re the same thing at a much lower price.

Food may take longer to prepare. You’ll have to plan out your meals in advance to make sure you can stick to your budget. You will have to spend extra time to do all of this, but it can be done.

The Internet Offers Tons Of Resources

Living on only $125 per month for your food isn’t all doom and gloom. As I mentioned above, it can definitely be done with some planning. Luckily, we have the internet as an amazing resource that didn’t really exist at the same level 20 years ago.

Blogs And Other Websites Help Save Money

There are many free blogs and websites that will tell you how to find the best deals on your groceries. There are similar blogs that will allow you to find super cheap recipes that are healthy.

Use these free resources in order to make your small $125 food budget stretch as far as possible.

Coupons Are More Accessible Than Ever

You can even find coupons online that you can print out. There are even some you can use on your phone if you don’t have access to a printer. You don’t even have to buy a newspaper anymore.

Just make sure you aren’t spending more on a brand name item, even with a coupon, when a generic is cheaper overall.

Real People Deal With This Every Month

Sadly, for many people, the $125 a month food budget isn’t a challenge. It is reality every single month. Let that sink in for a minute. If you’ve never had to worry about how you’re going to afford your next meal, consider yourself very fortunate.

Luckily, there are many ways you can help people out. You can donate food to food banks. You can volunteer your time at a food based charity such as a soup kitchen or meals on wheels.

You can pay for someone’s groceries when they realize they don’t have enough money to cover what the register rang up in the checkout line. Pay it forward!

Would I Ever Try The $125 Challenge?

I might try the challenge at some point, but I imagine it would be pretty difficult to get my wife on board. In addition, things change completely when you go from cooking for one person to cooking for two people.

I’d have to do some research to see what would be an equivalent challenge for a couple.

Don’t rule it out though. You may see a future post from us about this challenge.

Would you ever try the $125 challenge? Have you ever had to live on a $125 food budget or less due to financial problems? Let me know what you think about this and if you can think you can pull it off?

Also, let me know how you made it work if you’ve had to do it just to survive financially. Leave a comment below!

Photo by: avlxyz Text added by: Lance Cothern

How Do You Spend Your Credit Card Rewards?

what do you spend your credit card rewards onCredit card rewards are amazing.

Assuming you follow all of the rules, such as never paying a penny in interest or fees, you basically get free money for spending money you would spend anyway.

If you play the game right, you can easily end up with over $1,000 in rewards per year.

In fact, just in the last six month, Tori and I have accumulated over $1,300 in credit card rewards through earning sign up bonuses.

The question is, how will we spend that money?

Pretend They Are Part Of Your Normal Budget

Arguably, the smartest way to treat credit card rewards is to treat them as if they were part of your normal budget.

Use the money for whatever is your current top financial priority.

Pay Down Debt

If you have any debt, especially high interest rate debt, then you may want to put the money toward paying that debt down. When we were fighting to pay off Tori’s over $80,000 of student loan debt, we often used credit card rewards to go toward our extra principal payments.

However, at this time, we only currently have two mortgages as far as debt goes. We’re not in any type of hurry to pay either one off at this point, so I doubt we’ll use our rewards to pay down debt.

Invest For The Future

Investing for the future is a solid option for people with no debt. Even small amounts of money can increase greatly over time when it is invested and the power of compounding returns start to kick in.

If we wanted to be responsible with our credit card rewards, we’d probably invest them in either one of our retirement accounts or our taxable investments account.

However, at this time we’re feeling pretty comfortable with the amount of money we’re putting toward our investments, so we’ll probably end up spending our money on one of the following options.

Spend It On Vacations

I love vacations. I hate paying for vacations. Luckily, credit card rewards have allows us to take many of our vacations completely for free, or at least at a greatly reduced rate.

We generally use our credit card rewards to help pay for our cruise vacations. We can use hotel points for a free stay the night before our cruise, points to erase the purchase of our cruise off our credit card and cash back to pay for gas, parking and any other miscellaneous expenses that may pop up.

Of course, you can use credit card rewards to pay for flights to many vacation destinations, but we normally find ourselves driving on our vacations.

Buy Upgrades You Wouldn’t Normally Pay For

In the past, we’ve used our rewards to pay for upgrades that we probably wouldn’t have paid cash for. For instance, when we moved into our current home, all of the door knobs and hinges were brass and we hate brass.

Luckily, we earned a $500 Home Depot gift card and we were able to replace all of our brass with brushed nickel.

You can also use credit card rewards to pay for things like upgraded light fixtures, appliances or any other version of an item you wouldn’t normally pay to upgrade.

Go On A Once In A Lifetime Experience

If there is something you’ve always wanted to do, but never felt like you could justify spending the money on it, consider saving credit card rewards cash back to pay for the experience.

Whether the experience is skydiving, going up in a hot air balloon or even playing in the World Series of Poker, you can eventually go on the experience if you save up enough of your cash back rewards from credit cards.

Going forward, we’ll probably continue to spend most of our credit card rewards on either vacations, upgrades or once in a lifetime experiences. We worked hard to escape student loan debt and we’re already investing a healthy percentage of our income, so we decided to tag our rewards and fun money.

What about you? What do you spend your credit card rewards on? I’d love to hear stories of your favorite purchases or trips in the comments below!

Image by: Beverly & Pack Text added by: Lance Cothern