It’s the Most Wonderful Time of the Year, Every Year, So Starting Saving NOW!

Every year, there are certain holidays and special occasions that may obligate us to spending our hard, earned cash for gifts, meals, and decorations – maybe even fireworks. These holidays and special occasions include:

• New Year’s
• Valentine’s Day
• Easter
• Mother’s and Father’s Day
• Independence Day
• Halloween and All Saints Day
• Thanksgiving’s Day
• Christmas
• Birthdays
• Graduations

Day in and day out, we may not give these holidays and special occasions a second thought until they creep into our lives again, or when we flip the calendar. One step towards financial wellness is planning for life’s moments in advance.

 

The Gift Budget

Similar to a Health Savings Plan or Flexible Spending Account, you should spread out funds for your gift purchases over the year. Plan how much you plan to give in gifts all year, and only spend that amount. Spending $764 at Christmas or $126.03 for your Sweetheart on Valentine’s Day will seem less burdensome when it’s split into 12 easy payments to yourself, not your credit card.

In addition, consider a new tradition at Christmas – The Secret Santa Exchange. You’ll only need to buy one gift (or two if your families celebrate separately) and you’ll help your entire family save on expenses. Before Halloween (two months in advance), gather the names of all the participants, draw a name out of the hat, and spend no more than $25 on that person. You can even split the exchange between adults and kids so you can pass along the tradition to them.

 

Potlucks

Most of these special days are celebrated around food. Rather than cater or individually hosting a meal, opt for a potluck.

If you do celebrate at a restaurant, consider going dutch at family gathering to help ease the expenses on the entire family. Just be sure to discuss it in advance so you can avoid that awkward moment when you start to explain your journey to financial wellness.

 

Clothing and Costumes

Some holidays prompt us to purchase special clothing that we may never wear again. Growing up, the family spent a pretty penny on Easter dresses and wedding party dresses. Instead, consider purchasing an outfit you can wear again.

 

On Easter, durable spring dresses and outfits can be purchased for children. If you are planning for or standing in a wedding, the bride could allow her bridesmaids to select their own dresses, as long as it matches the color palette. For Halloween, consider purchasing costume pieces from a thrift store or resale shop. If you have random items lying around, you could always make your own homemade Halloween costume.

 

Electricity and Other Utilities

Most people may not consider this cost part of the Gift Budget, but if you’re the type that likes to decorate at Christmas like The Griswolds, you should plan for this cost in advance. Take a look at your utility bills and determine what it cost you to decorate your home for Christmas, for Halloween Haunted House, or that monthly inflatable in the front lawn.

Additionally, if you host family at your home during the year, the electricity and water cost should be factored in as well.

Take the Deal, but Don’t Get Taken on Craigslist

Sometimes you need to sell things. Other times, you need to buy things. If you are trying to become Debt Free, you probably don’t want to pay full price, and you don’t want to pay Stupid Tax. Craigslist can be a great place to purchase items below the retail price, but there are some tips you want to keep in mind.

 

The Red Flags

There are sellers and resellers on Craigslist. Be sure you know which one you are dealing with online. A seller’s ad will usually have a detailed description and several close-up photos of the items. Additionally, you may see a local number or a typical email address. A reseller’s ad may have a vague description and a stock photo of the item. The phone number may have an out-of-town area code, an odd email address, or shady instructions for payment (PayPal Scam).

 

The Deal

• Be patient. If you are searching for the perfect item, it may take a little while to find it. Take your time. When I searched for the perfect bike, it took a while. When I searched for an elliptical machine, I found it quickly.
• Trust your instincts. If something on a posting seems odd, take note. It’s okay to call or email for information about the item. If something doesn’t seem right, pay attention to your gut and move on.
• Check reviews. If you see a good deal, follow up on the item, and then check out reviews on various sites. It is helpful to have the brand and model number of the item when you are doing your research to compare apples to apples.
• Compare prices. See if you are really getting a good deal by comparing the Craigslist price to prices on other sites such as Amazon, Overstock, Ebay, and other resale sites.
• Test the item. Try to stay local so that you can arrange to test the item. If you’re not an expert on the item, bring a friend who knows how to test it. When I purchased an iPhone on Craigslist, I took a techie with me who knew how to work the phone.
• Negotiate. Learn the difference between “Firm” vs. “OBO” and find out if they are selling other items that can be bundled.
• Pay with cash. Craigslist deals are usually final and cash brings quick closure. Besides, you don’t want your check account number or debit card number floating around.

The Scam

• “If it sounds too good to be true…” If you have heard the saying, then you have been warned.
• Don’t feel obligated to buy the item. Even if you communicate with the seller, research the item, and see the item in person, you shouldn’t feel compelled to purchase the item.
• Safety in numbers. Whenever you are meeting with a seller, always take a friend. There are cases of “robbery by appointment” across the country.
• Meet and exchange in public places. Coffee shops, bookstores, and police stations are very popular places to meet. If you are dealing with large sums of cash, a branch of your bank could also be an option. If you are dealing with Apple products, you could meet at an Apple store and have the Genius Bar run a check on the item.

Protect Yourself

• Cell Phone Numbers. You can use Google Voice to create a temporary number if you are uncomfortable using your own.
• Email Addresses. When I found a lost dog and attempted to find its owner, I created an email address specifically for that purpose on Craigslist. After weeks of no news, we shifted gears to find a home for the dog using the same email address on Craigslist. 

Sell It or Deduct It: Which is Better?

One way that you can make extra cash is to sell items that you don’t need anymore at a yard sale, auction it on eBay, or list it on Craigslist. Generally speaking, the IRS doesn’t consider profits from the occasional yard sale or garage sale to be taxable income.

I have a relative who is a mastermind of yard sales. Not only are they great at pricing items, they are also great at negotiating the final sale price. This is a skill I have yet to acquire, but I have learned a few things over the years about yard sales.

Is selling it worth it?
A yard sale is worth it if you have items that are considered big sellers such as:
• Appliances (washers, dryers, refrigerators)
• Children’s Clothing and Toys
• Electronics (TV’s, stereos, computers)
• Sporting Goods & Exercise Equipment
• Furniture (sofas, dining sets, futons)
• Power Tools (drills, saws, tool boxes)
• Vehicles

Otherwise, you could be sitting for a few hours with items that could have brought you a good tax deduction instead. Keep in mind that these big sellers should be in working condition.

How should you publicize your yard sale?
If you have any big sellers, you should mention your big sellers on the road signage, newspaper ad, or Craigslist post. If you live in a neighborhood or apartment complex that has a community yard sale, you can take advantage of their advertising.

What are the best hours to have a yard sale?
Typical hours for a yard sale occur on Saturday morning. If you plan you yard sale for 7 a.m. to 11 a.m., you shouldn’t be surprised if you have shoppers show up at your house at 6 a.m. These are your serious buyers who know exactly what they are looking for at yard sales.

Another strategy is to have an early evening yard sale on Friday. This may require you to take a few hours off of work, so you’ll need to determine if your PTO is equitable to the sale price of the items. If you don’t have any big sellers, it may not be worth it.

What should you do with the items that didn’t sell?
There is one thing that must be understood about yard sales – not all items will sell. Once you can get over this fact, you will be able to remove your emotional attachment to the items you are trying to sell. It will also be easier to donate those unsold items to charity. Depending on the condition of your unsold items, you may be able to get a decent tax deduction.

How do I take the tax deduction?

1. First, make of list of all of the items you are donating to charity.
2. Second, determine the Fair Market Value of the item. The IRS does offer guidance about assessing Fair Market Value. To make the process easier on my family, I used TurboTax’s It’s Deductible software to gauge the worth of my soon-to-be donated items. It’s Deductible will want a few details about the items about their condition. You can also use The Salvation Army’s Value Guide to determine Fair Market Value.
3. Third, take photos of your donations and keep the donation receipt. The photos and the receipt are going to be the best proof that you donated the items. Although the IRS may want details starting on a $5,000 donation, I start keeping records if my donation started reaching the upper range of three digit figures.
4. Lastly, take the tax deduction the following year. You may be pleasantly surprised when you see you tax liability reduced.

Each individual’s tax situation is different, so you will want to double check the laws in your area. This is especially true if you have substantial income from your yard sale, eBay auction, or Craigslist ads.