Despite our best efforts we still didn’t sit down to do our shopping until about a week later than I would have liked. Unfortunately, with a work trip for MITBeta, a new baby on the way, and an apartment to be rented, we were preoccupied earlier this month. Because of my frugality and my past experience with Amazon I still choose to use Free Super Saver Shipping, even though they warned things may not reach us by Christmas. I will have to wait and see if this was a prudent choice. We are buying multiple gifts for most of the kids so my hope is that at least some of the gifts arrive on time and in a perfect world Amazon is managing expectations and everything will be in on time anyway. I haven’t had problems in the past and everything usually arrives in the nick of time. As of this post a lot of items have already shipped despite the late estimates. Amazon does a really good job of managing expectations.
One regret I have is not using the click thru option for shopping with Amazon. MITBeta and I are big fans of public radio and like to support it when we can. I obtain almost all my news from this source and feel like it’s nice to give a little back. Our local station has an option to click thru from their site to do your Amazon shopping. Although I remembered this fact while we were shopping for gifts, when I actually placed the order I forgot to click thru. I will try to remember this for next year.
I have decided it would also be a good idea to add Christmas cards to the budget for next year. It may not change the overall total since we came in under budget but it is an anticipated cost that can add up. I ended up buying 75 photo cards from Costco which had the best prices around for around $20. I think I typically spend about $40 for a similar amount of cards. In order to mail these cards I bought stamps, 100 for $42. So I think a safe budget number for cards would be around $60 and it pays to look around for the best deal.
Another thing that no one probably thinks about is swaps and charitable giving. Swaps are a great way to cut down on the amount of gifts purchased, while still sharing in the tradition of giving. If you are involved in a few different swaps each year it is probably a good idea to add those to your budget. If you have a couple of swaps with friends and work this could account for up to an additional $100. It’s also nice to donate to charity at this time of year and MITBeta’s work has organized giving for Toys for Tots.
We do not want to forget our readers who may celebrate other holidays this season. I’m sure budgeting for Hannakuh gifts would be no different. Both holidays have anticipated expenses and are something to add to your yearly budget in order to avoid the holiday shopping crunch and credit card run up in January! But let us not forget that the most important thing this holiday season is spending quality time with friends and family.
We like to extend our warmest wishes to all our readers this holiday season!
Editor’s Note: All of the gifts that we ordered from Amazon.com last week have arrived and are wrapped. Hooray for Amazon and free shipping.
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A couple of weeks ago I reviewed Nudge: Improving Decisions about Health, Wealth, and Happiness by Richard H. Thaler and Cass R. Sunstein. I wanted to take some time to explore two of the big personal finance concepts in this book: Saving and Giving more later.
Nudge details a study that shows that 401(k) participants who attended a seminar on retirement savings and why they are so important were still reluctant to increase their participation in the plan. However, when presented with an option to increase contributions in the future, a large number of them agreed. A few months into the program, participants automatically started having an additional 1%-2% of their paychecks funneled into their 401(k) plans. Additional increases occurred periodically, every 6 months to a year, until the participant had reached the contribution limit. Most participants stayed in the program.
For some reason, people resist the idea of giving up money now, even if it is ultimately in their best interest. However, most have no problem with committing to contributions at some point in the future. Perhaps future money is sufficiently abstract that as long as we’re just dreaming about it, we can be convinced to do anything with it. Maybe this is why “No Money Down, No Payments for 90 Days” financing offers are so popular as well.
As I am learning in Getting Things Done, the book I am currently reading, people are too often paralyzed with the idea of starting a big project. This is because they often look at the project as a whole instead of seeing just what needs to be done next — the Next Step. I think that this is what drives a lot of the resistance to increasing 401(k) or emergency fund contributions. Most people hear that you should be saving 10% or 20% for retirement and get discouraged because they’re not saving anything. From the standpoint of 0%, 10% looks impossible.
Mathematics tells us that there are an infinite number of increments between 0 and 10. This leaves A LOT of opportunity to take the Next Step towards a savings goal. Most of us can also easily absorb a 1% reduction is gross pay, and if we can’t, then we can try 0.5% or even 0.25%. But something is better than nothing as a first step, and starting today is better than starting tomorrow.
A similar concept to Save More Later is suggested in the book for charitable contributions. Right now, ScrapperMom and I have no set plan for charitable giving. Usually the bulk of our giving ends up being sponsorships of friends and family in some walk, run, or flower sale of some kind or another. This is irregular, typically doesn’t amount to much, and doesn’t go to any charity that we actually get to pick. It’s also hard to stomach a big hit in our current spending plan. However, our daughter’s Money Savvy Pig[gy] bank has a slot marked “Donate” on it, so if for no other reason than not to be a couple of big hypocrites, we probably should start to make some effort in this direction. (Don’t get me wrong here, there are much better reasons…)
Enter the Give More Later concept. This works pretty much the same way as Save More Later. Start with whatever charitable contributions you are making now, and commit to increasing this contribution at some point in the future.
Okay, easy enough, right? Not quite. The same inertia that’s keeping me from starting a charitable contribution plan now is the same one that’s going to keep me from Giving More Later. Because if I wait until the day for which I have committed to increase my contributions, it will be the same situation as today. Fortunately, there are some easy ways to give more later. For example, I just logged into my ING Direct account, created a Charitable Giving sub-account, and then set up an automatic monthly transfer of about 0.5% of our income — to start in January of 2009. I also created a calendar entry in March of 2009 to remind me to increase or create a new automatic transfer for some point in the future. As Getting Things Done would say, I have “installed a new trick” in my finances.
Can you afford to save or give more later? Check with your 401(k) manager to see if there is an option to do this if you’ve been meaning to save more, but just haven’t been able to get around to it. If you don’t have this option in your plan, you can create a calendar entry for sometime in the future. Or you may be able to give instructions to your Human Resources department to increase your contributions for you at some time in the future, or to make contribution increases on your behalf whenever you get a raise.
Do you think a strategy like this would work for you? Do you have a better idea for how to save or give more later? Let’s hear about it in the Comments below!
Reminder:You still have 3 days to get your entries in for the Don’t Feed the Alligators Giveaway!
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