January 18, 2012

Here Come the Holiday Bills: Now What?

The holiday bills will soon start to pile up. All that spending and giving, partying and enjoying friends and your satisfying retirement was fun, but now the unfun part starts. How are you going to handle all those credit card bills, along with the basics that must be paid, like heat, food, gas, and clothes?

The most important message I can communicate in this post is that a financial decision can be short-term. That is, some of the ideas I list below may not be necessary for any longer than it takes you to get back on top of the financial mountain. Don't say to yourself, "Oh, I could never live without this or that. They are too important to my happiness."

I'm not here to judge whether that is a legitimate position for you to take. One person's necessity is another person's extravagance. But, too often when we think of cutting back we picture it going on forever. Faced with such a future, we often can't take that step. So, just remember, what you choose to do now doesn't have to be permanent, just long enough to get back to an even keel.

Keep a budget

This will always be first on my list. Keeping a budget makes a person much more conscious of how money is being spent. Having a monthly limit for each category helps rein in spending. One fail proof method is to put cash into envelopes for each category. When the money is gone, stop spending until next month. If the envelope is empty before several months' end either the amount budgeted must be increased or spending for that expense must be cut back.

I used the envelope method for years until I was comfortable with my budget-setting skills. Today, I use Quicken as my "envelopes." When the amount in a particular category has been spent for that month, I stop.

Cancel Unnecessary Services for now

Find your newspaper subscription heading into the recycling bin everyday with most of it unread? Do you really enjoy all those magazines each month? Do you find you stream very few Netflix or Hulu Plus movies? Do you find yourself cleaning up after (or before) the cleaning people? Cancel what you can and reassess after the holiday bills are taken care of. You may discover you don't even miss some of those services.

Cut Way Back on Going Out to Eat

We used to allocate almost $250/month to dining out. It was a reward after being on the road many days each month and was one of my family's favorite forms of entertainment. That spending pattern extended into the first year or so of retirement.

Now, the dining out budget is just over $100 a month, enough for 3-4 meals out if we are careful and make one of them a lunch instead of dinner. Suddenly, the meal away from home becomes a special treat, something we look forward to. I know couples who spend that much (or more) in an average week. If we did it would cease being special and the money would be wasted.

At a few points in my career our dining out budget was zero. When I was between jobs or things were not going all that well we simply stopped eating in restaurants until the situation improved. It caused no harm and didn't leave us feeling deprived. It was simply a necessary, short-term step.

Coupons and Discounts are Your Friend

I receive every e-mailed discount coupon offer available: Groupon, Deal Chicken, Living Social, Entertainment Daily Deals...some I don't even remember the names of. I delete at least 90% of them, but restaurant or vacation deals get used. 

Our supermarket lets us "price match." They will match any special price offered by any other supermarket in town, By checking prices on Wednesday we design our shopping list for Thursday and save money. Rarely are national coupons a better deal than the generic house brand, unless there is no substitute. Then, a coupon is used.

Cut Out Starbucks, Dunkin' Donuts, etc.

Is Dunkin' Donuts, Einstein Bagels, or a coffee shop a regular for you? Stop going until you can afford it. Make your coffee at home. Donuts are bad for you so your body will thank you. Yes, I know Starbucks offers free WiFi, but then so does your home. 

Stop Carrying Extra Cash

How does this fit with the suggestion to use cash in envelopes? If there is little or no extra cash in your wallet impulse purchases might be reduced. It is wise to have a few $20 bills tucked away someplace for an emergency cab home or similar problem. But, carrying hundreds of dollars with you makes it much too easy to spend a little here and a little there. If possible use your debit card so the money comes right out of your checking account and you instantly see the purchase on your on-line account. Or, if you prefer, take the cash from the grocery envelope when you go food shopping. 

Remember, you may not need to take all of these steps and none of them need be permanent. After the holiday bills are paid, decide what should be reinstated and what you never really missed.

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  1. So glad I am Jewish. No December holidays to break the bank. Chanukah doesn't count since it is mostly the eating of latkes!

  2. Most important- start saving for next year!
    Take the amount you spent this year, divide by 9 months and save. Nine will become eleven months next year when you are not spending January and February crushed
    by debt!

    By having a budget to begin with, you have a budget to work with. I can stick to amount of money allocated!
    The added bonus is our kids know we save, and presents become something they appreciate.

  3. Janette,

    Divide by 9 months instead of 12...excellent insight. It is hard to think about next holiday season when you are still paying off last year.

    But, boy, does it seem to come around more quickly each year. Maybe that is because stores start their holiday season sales in August!

  4. Excellent topic selection. I don't know how much money it takes to make me happy -- not sure I'll ever really know.

    However, the amount of money we have available is the amount that we've always tried to make do with. I believe that this is a necessary part of an accumulated set of life skills -- learned skills, as in best to start early and practice long


  5. QwkDrw,

    Making one's life work with the amount of money available certainly helps lower the stress level!

    Our best hope as a society is to get young people (no later than 30) to get into the habit of saving and investing.

  6. Bob,

    Even though I've been retired not quite a year, I've found that what we original established as our retirement budget is turning out to be more than we need, primarily because of many of the reasons you've identified in this post.

    We've likewise slashed our eating out budget, by 50% in our case, because we realized we didn't care to eat out as often now that we had time to shop for and make wonderful meals at home. We've found the same to be true with our clothing budget as well, discovering that in the absence of work related stress we no longer have a desire to go shopping for new clothes "just because."

    Add consider adding TravelZoo.com to your discount deal sites list. We just picked up a two night/$56 per night Las Vegas deal at Bally's, including a buffet dinner for two each night, via TravelZoo.com. It was such a good deal we felt we couldn't afford not to go!

    What we've found most interesting is that even though our spend is decreasing, the richness of our lives is increasing as we continue to identify pursuits that are low in cost but high in intrinsic value. This "aha" was always there for the taking of course, but in our case we didn't figure it out until year one of retirement.

  7. Tamara,

    I will certainly check out travelzoo for deals. The more discounts the merrier.

    I guess we all get a bit smarter as we age...stuff that adds value to our life doesn't have to cost much if anything. Experiences last and things don't.

    Thanks, Tamara.

  8. Good ideas, Bob. We paid cash for all the holiday gifts, except for a little on our credit cards that we paid off at the first of the month.

    I read somewhere that with all the frenzy of buying over Black Friday that afterward many regretted it and started returning things soon after:)

  9. Hi Joan,

    Re: Black Friday returns...I wouldn't be surprised. There is something about the idea of deep discounts that causes many of us to buy something that we really don't want because we can't bypass a deal.

    It is almost like the most absurd statement regarding saving you're ever likely to hear: "The more you spend the more you'll save."

    That's not even remotely true!

  10. Great blog, I have being reading this site for a few month now and thought it was about time I let you know how great this blog is :) I come across a website about Retirement Homes I am not sure if you are familiar with the website but I found it to be a great resource for the elderly. Maybe you can check it out and let me your thoughts on it. Keep up the good work.

  11. Colin,

    Thanks for your readership and positive feedback. Yes, I am familiar with that web site and have looked at it several times. I encourage other blog readers to do so too.

    There is another site with the same name listed on the sidebar in blue that you should look at if you haven't seen it. For full disclosure, they help sponsor this blog but I accepted their business because their site is a good resource.

  12. We cut way back on the holidays this year, so the bills weren't so bad. With the kids grown and the babies too young to know what's going on, it was easy to keep things simple. But in times past, I have been hit with big bills, especially when I did a lot of holiday entertaining. Great tips for coping and moving forward.

  13. Like you, Galen, we cut way back this year by giving only to the children and holding the gift giving in Flagstff while we were out of town for a few days.

    But, I too remember when our kids were young. The credit card bills in January and February were enough to motivate me to constantly seek out new clients!

  14. Im extremely impressed with your writing skills as well as with the layout on your weblog. Is this a paid theme or did you modify it yourself? Either way keep up the excellent quality writing, it is rare to see a great blog like this one these days..

  15. Anonymous,

    Thank you very much for the compliments. I use a standard blogger template but modified some of the elements. I just learned how to design and add a button ad a few days ago. Blogging is an on-going learning experience.

  16. We've been away from home for two weeks and I've only had one espresso. The other days I came into the kitchen and my sweetie had made a pot of coffee.

    I may carry that forward when we return home. It will save us $50 a month, at least.

  17. Steve in Los AngelesThu Jan 19, 11:35:00 PM MST

    Hi Bob,

    I also am Jewish. As I worked hard for my money, I continue to live frugally and have no problem living frugally. All of my extra money goes into paying down my mortgage even faster.

    I have not driven my car since last week. I put some gasoline into my car last week for the first time in over six months. I have eaten out only once this month. I ate at one of the Asian buffets. I have complete control over my spending.

  18. Linda,

    Those out-of-the-house coffee charges can really add up. I've never been a fan of the Starbucks-type shops. I can brew an entire pot for less than they want for a smallish cup. Your hubby is on to something.

    Have a safe journey home from Arizona. You missed a record-breaking storm!

  19. Steve in L.A.,

    Like Roberta (first comment) you get to bypass most of the craziness of the holiday-spending season. It does make quite a difference in the year end bills.

    I couldn't manage driving as little as you. I've set a goal to put no more than 9,000 miles on one of the cars and 4,000 miles on the other this year.

    There are weekly trips to my Dad's home and to see the grandkids, driving to the place where I do my prison ministry work and to one of the state prisons (140 miles roundtrip) plus vacations. Keeping the miles down will be tough but worth the effort to try and keep each car for 10 years.

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