Thursday, February 25, 2010

Christmas Club Account

I love Christmas it is truly my favorite time of the year. I love giving and receiving gifts. I enjoy the four Sundays of Advent and the Candlelight Service on Christmas Eve. I like Christmas Trees and decorations in other words I really like Christmas. I also like to stay out of debt and that is why Frugal Chick and I plan for Christmas.

We plan our Christmas in such a way that credit card companies do not leave something extra special under the tree for us in January. First we list all of the people we buy gifts for and using past experience we estimate the amount we expect to spend on them for Christmas. We also try to estimate purchases of Christmas Cards, decorations, wrapping paper, lights and miscellaneous items we expect to buy for the coming Christmas Season. We add all of these items together and divide by 11. Do not try to set money aside in December, if you are like us it just does not work. This is the monthly amount we save for Christmas expenditures. Make sure this monthly set aside works within your monthly budget.

Realize most banks have done away with Christmas Club Accounts; however, our recent recession has caused a few of them to revisit this policy. If your bank has a Christmas Club account utilize it, if they do not simply open a new savings account (one with no fees) and use it for all of your Christmas transactions. If the bank limits the transactions in this account simply move the money from savings to checking once every two weeks during the Christmas Season. Or you could open a separate checking account and only use that debt card for Christmas purchases. The trick is you have to keep it out of sight and out of mind so as not to be tempted to use it during the year. In other words REMOVE it from your wallet except for November and December.

We have found that planning for Christmas purchases makes it a much less stressful time of the year. It allows us to enjoy making purchases for those we love without worrying about how to pay for them. Our Christmas financial plan also allows us to give money during the Holidays to those who are in need and to perform random acts of kindness. Next year during November and December have a merry and frugal Christmas.

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