If you are as old as me, you can remember K-Mart’s blue light specials and their layaway program. My friend’s parents used the layaway program every year to buy Christmas gifts. For you younger people, with layaway, you could pick out items, often at a sale price, and have them held while you made weekly or monthly payments on them. When the last penny was paid, they were all yours.
That was the good old days, before credit cards became a way of life. Today’s mentality is to buy now on credit and pay later, with interest. By the time you’ve paid off Johnny’s bike, it will be time to replace the tires and helmet. Or, upgrade to a new fat tire model. No problem. Just charge it again! And pay more interest.
You can do better than that by planning ahead and using sinking funds. You know that Christmas comes every December, and birthdays are just as predictable. Cars only last so long and will eventually need new tires and other repairs, or to be replaced altogether. These things should not come as a surprise and certainly do not need to be funded by a credit card.
Here in the great cold Northland, we have to fill our propane tanks a few times every year, or freeze. The propane companies actually do have a layaway program of sorts. You can prepay for propane in order to get a better price, and have it delivered throughout the winter when you need it. You can save hundreds of dollars doing this if you plan ahead. But, if you fail to plan ahead by saving a little each payday, you will end up scrambling and using credit again. This is such a vicious cycle to get stuck in.
Do you wait until the day before your kid’s birthday to buy a gift, hoping a miracle will appear in the mailbox? Start stashing a little now and experience the fun of finding his favorite thing on sale with plenty of time to spare.
Do you find yourself falling back on credit card use whenever you need to buy unplanned for items? It’s so easy to do, but it becomes a trap that’s hard to get out of.
Stat by making a list of all the things that possibly could come up over the next year. Set a goal amount for each category and start a sinking fund. These categories could include the following, but you can probably think of others personal to you.
Birthdays and Anniversaries
Take some time to decide on the best gift for each person. You can also decide ahead of time that maybe you are being too extravagant in some areas because of poor planning.
For example, my brother has always had plenty of money to buy whatever he wants. I used to stress about what to buy him as a gift, because he already had everything he wanted and anything I bought would just be more stuff. So, I started making him a homemade pie for his birthday every year and he is always very enthusiastic about it. I could spend too much money each time, trying to find something impressive enough, but why? He doesn’t care about getting more stuff.
Gifts are not always necessary. A well-written card can go a long way for some people. It really is the thought that counts!
Baby and Wedding Showers
It’s a lot of fun to shop for a baby shower or a wedding present. Little tiny baby clothes and stuffed toys. New towels, kitchen gadgets, and crystal vases. Or, maybe cash in a card. Do you want this coming out of your spending money, or would you rather have a small stash to cover these random events?
Graduation Parties
It’s finally spring, you kids are getting out of school for the summer, and suddenly your mailbox is full of invites to grad parties. I guess, since they usually feed you, you can put the cash in their card that you would have used to go out to eat! One of my friends gives hundreds of dollars every year to graduating kids of her friends and family. She has learned to plan for it though.
Christmas
Christmas can be downsized and new traditions started that are more fun and meaningful. My mom thought she was Mrs. Santa and every year we had a huge pile of gifts. My dad always got a bonus check in December and that’s where it went. It was fun for us kids, but I’m sure we would have been just as happy with a lot less. And my parents would have been less stressed if they had used some of the money for car and house repairs.
School Clothes and Supplies
Every August, you see the stores full of parents and kids scrambling to get school supplies and new clothes and shoes for the first week of school. Stores are booming and lots of great sales are going on. If you’ve planned ahead, you can take advantage of these sales stress-free.
Sports Gear
Kids are expensive! There’s no doubt about that. And sports fees and gear add up real fast. Soccer, baseball, football, tennis, volleyball, track, golf, and basketball. The list goes on. Cleats and uniforms, golf clubs or tennis rackets, duffel bags and gloves. Cha-ching. Definitely want to plan ahead for these things.
Car Repairs
If you own a car, you are going to have to replace tires, tune it up, change the oil, repair the engine. It’s part of the package of having a vehicle. Shop around ahead of time for a reliable and affordable mechanic. Plan to service your car regularly to keep major repairs at bay. But save up for those, too. Eventually, you will have something go wrong. A small savings bucket for your car really turns what could be a crisis into only an inconvenience.
Clothes and Shoes
Do you shop for clothing items you really need in your wardrobe, or as a form of therapy? Set a annual budget for clothing and stick with it. Go through your closet and make a list of what you need to fill in the gaps. This isn’t to say that you can’t ever buy anything because it’s cute, only that you should keep the impulse buys down in order to get what you really need.
Replacing Old Appliances
It’s amazing how long most appliances last. I finally had to replace my clothes dryer last year after 15-18 years. I don’t even remember when I bought it originally. I think my husband replaced a part on it once. But, it did finally quit for good and had to be replaced. And I wasn’t given any warning. So, start a general sinking fund for appliances and it will be more fun to go pick out a new refrigerator when the time comes.
Flowers for Your Spring Garden Pots
This year, I started planting flower seeds in little cups back in February. I was a little early in my eagerness to get past winter, but now we have plenty of plants to fill up our pots. It’s a new experiment for me and we will see how well they do as they start to flower. It has saved me from going out and buying greenhouse plants like I usually do, which adds up pretty quickly when you get in there and see all the beautiful flowers you just have to have.
Renewed Certifications and Subscriptions
Many jobs require certifications that have to be renewed every year, sometimes requiring CE classes. They are just another expense that you forget about until it creeps up on you. Subscriptions are the same way. Amazon prime, Costco, and PlayStation Live are automatically renewed and you end up with unplanned charges to your account.
The list could become quite endless, but knowing what is coming ahead of time gives you time to plan, not only to set aside money to buy it, but to choose exactly the right item at the best price.
Start sinking funds for the categories that make sense to you and spend a little time thinking about what is really needed and where you can get the best deal. This will stop the impulse buying and you will be more satisfied with every purchase. Start your own layaway program with sinking funds and you will no longer need to use credit to get by.