Planning For Retirement – Part 4 … 401(k)’s

In Part 1 of this series, we briefly discussed how retirement planning had changed from the days when Joe went to work for The Big Company.  Back then, the company provided a pension plan that paid Joe a retirement income based on how many years he’d worked for the company and how much he made while he worked there.  Today, his grandson, Joe3 works for a company that offers a 401(k) plan rather than a pension.  But, how does the 401(k) work?

A 401(k) plan has much in common with an IRA.  Like an IRA, the 401(k) allows Joe3 to reduce his taxable income by contributing money into the plan.  Joe3 directs his employer to deduct a specific amount of money from each paycheck.  These untaxed funds are invested in accordance with instructions that Joe3 provided when he authorized the deductions.  The growth of the investments is not taxed until such time as Joe3 takes money out of the account.

Because this is intended to serve as his retirement plan, Joe3 is expected to leave the money in the account until he is at least 591/2 years old.  If he withdraws money from the account before that age, he will pay ordinary income taxes on the money withdrawn; and, he will pay a 10% penalty for the premature withdrawal.

One of the real advantages of the 401(k) plan is the ability to contribute far more to the plan than is permitted for an IRA.  While the maximum contribution to the IRA in 2012 is $5,000, an individual can contribute up to $17,000 into the 401(k).

Another advantage is that this plan allows an individual to reduce his or her taxable income regardless of annual income.

Moreover, because the 401(k) plan entails regular, consistent, investments, the individual is able to take advantage of the concept of “Dollar Cost Averaging”.  Dollar Cost Averaging simply means that the purchaser buys more shares when prices are low and fewer shares when prices are high.  Consider this example.  Joe3 has decided to invest $100 each month in stock issued by the XYZ Company.

Month Price Per Share Total Shares Purchased
January $10.00 10
February $5.00 20
March $20.00 5
Total $300.00 35

As can be seen, Joe3 has invested a total of $300.  If he decided that he wanted to sell all of his shared in the XYZ Company, how much would he have to sell them for in order to make money; $5, $10, $20, or something else?  If we divide his $300 investment by the 35 shares he owns, we can see that he paid an average of $8.57 per share; thus, he’ll make money if he sells the entire investment for more than $8.57 per share.  Of course, this does not include any fees that he may have to pay when selling the shares.

Now, let’s extend this concept into Joe3’s 401(k) program.  If Joe earns $500 per week and directs his employer to deduct 10% ($50) from each check and place that money into his 401(k).  When prices are high for Joe3’s chosen investment, he will buy fewer shares at the high price.  When prices are low for Joe3’s investment of choice, he’ll get more shares.  At his retirement, Joe3 will have amassed a significant retirement account that he can convert into a regular monthly income to support him in his golden years.

One final potential advantage should be recognized here.  Some companies provide some type of matching contribution to an employee’s 401(k) contribution.  Joe3’s company contributes $0.50 (fifty cents) for every dollar that Joe3 puts into his 401(k).  This represents an immediate 50% return on his investment so longs as Joe3 remains with the company long enough to “vest” that matching contribution.

Companies have a choice in vesting schedules; specifically, that matching contribution becomes the employee’s money when one of two schedules has been met.

  • “Cliff Vesting” – the entire matching contribution becomes the employee’s property after 2 years of employment.
  • “Stair-Step Vesting” – the matching contribution becomes the employee’s money in increments; i.e.,
    • 20% of the matching contribution belongs to the employee after 2 years of employment;
    • 40% of the matching contribution belongs to the employee after 3 years of employment;
    • 60% of the matching contribution belongs to the employee after 4 years of employment;
    • 80% of the matching contribution belongs to the employee after 5 years of employment; and,
    • 100% after 6 years of employment.

Some employers measure the beginning of the vesting period from the initial date of employment while others measure it from the date on which the matching contribution was made by the company.  Of course, the employee’s contributions to the plan always belong to the employee and cannot be taken away (which is not to say that the value is always the same … the value can increase or decrease based on the performance of the investment that the employee has chosen).

Just like the IRA, Joe3 must begin withdrawing money from his 401(k) by the time he turns 701/2.  Failure to make the minimum annual withdrawals will result in the assessment of tax penalties.

401(k) plans offer employees a great way to plan for retirement through the use of payroll deductions (if you don’t see the money, you don’t miss the money) and growth within a tax sheltered environment.  If your employer offers this type of retirement plan, check it out … someday you’ll be very glad you took advantage of the opportunity to plan for your future retired life.

NEXT UP … 403(b)

Planning For Retirement – Part 3 … ROTH IRA’s

The ROTH IRA is perhaps one of the best tax advantaged retirement plans available to the individual taxpayer today.  Created in 1997 by the Taxpayer Relief Act, the ROTH IRA is similar to a traditional IRA in that it allows individuals to save for retirement in a tax sheltered environment; i.e., the earnings and growth within the account is not taxed.  However, there are some significant differences.

  • Contributions are not tax deductible.  All money put into a ROTH IRA is “after tax” money.  You’ve already paid income taxes on it.  While this may initially sound like a disadvantage, it proves to be a real advantage when it comes time to withdraw funds from the account.
  • Withdrawals from the ROTH IRA after age 591/2 are tax free.  That is huge!  Where all withdrawals from a traditional IRA are subject to federal income tax, both the principal and the growth are untouched by the tax man when they are withdrawn from the ROTH IRA.
  • There are no minimum annual withdrawals required from a ROTH IRA after age 701/2.  For someone who does not necessarily “need” the money from their retirement fund and who wants to leave it as a legacy to a family member, this allows the money to continue growing in the tax sheltered environment.
  • Where the traditional IRA prohibits any additional contributions after age 701/2, a person can continue to contribute money into his or her ROTH IRA so long as he or she has income.
  • Earnings can be withdrawn without federal tax penalties when the funds will be used for:
    • expenses for a post-secondary education (i.e., college or accredited trade or technical school
    • health insurance after a long period of unemployment
    • periodic payments such as credit card debt
    • catastrophic medical expenses
    • payment on a levy
    • If the money has been invested for five taxable years, earnings can be withdrawn tax-free if the individual:
      • has reached the age of 591/2
      • has become disabled
      • is using the money for a first-time home purchase
      • has died

One final note regarding withdrawals from a ROTH IRA is in order.  If the ROTH IRA owner dies and the spouse is the beneficiary, the spouse has the right to roll the money into his or her own ROTH IRA or postpone taking payments based on projected life expectancy until the owner would have been 701/2.

The ROTH IRA has the same contribution limits as the traditional IRA discussed in Part 2, including the availability of the “catch-up contributions” if the person is over the age of 50.

Because the ROTH IRA empowers us to accumulate money in a tax-sheltered environment and permits tax-free withdrawals in retirement, this may well be one of the very best retirement planning options available to U.S. taxpayers today.  If you haven’t looked into this great plan, you might want to do so today!

NEXT UP … 401(k)’s

Planning For Retirement – Part 2 … Individual Retirement Accounts (IRA’s)

Basic Information

The creation of Individual Retirement Accounts was included in the Employment Retirement Income Security Act (ERISA) of 1974.  This law empowered individuals to create their own retirement program by contributing money (at that time, the maximum contribution was $1,500) into a special account that would grow on a tax-deferred basis; and, the contribution to this account would reduce the individual’s taxable income for the year in which it was made.  Tax-deferred growth was, and continues to be, one of the greatest advantages offered by an IRA.

Originally, these plans were restricted; meaning, only those people who did not have any type of employer sponsored retirement plan could participate.  But, over the past 37 years, numerous changes have been made to the IRA.  Today’s IRA can be used by any individual; but, there are qualifications that determine how the plan can be used to reduce taxable income.  To see how the plan works, we’ll examine several different scenarios.

Janice works for an employer that provides no retirement plan of any sort to its employees.  Because Janice has no access to a qualified retirement plan, she can contribute up to $5,000 to her IRA and her full contribution can be deducted from her taxable income.  Thus, if Janice makes $40,000 this year and she contributes the maximum amount into her IRA, she will immediately reduce her taxable income to $35,000.

Todd has a qualified retirement plan available to him through his employer.  Because he is eligible to participate in this plan, Todd has some restrictions on tax deductibility of his IRA contributions.  If Todd’s modified adjusted gross income (MAGI) is less than $58,000, any contributions he makes into an IRA will be fully deductible.  If his MAGI is over $68,000, his contributions will not be deductible.  If MAGI is between these two amounts, his contributions will only be partially deductible.

Loren is 60 years old.  Because he is over 50 years of age, the law allows him to contribute up to an additional $1,000 to his IRA under what is referred to as the “catch-up” provision.  The deductibility of this additional contribution is subject to the same standards as both Janice and Todd.

The limits to modified adjusted gross income for married couples are higher; and, the availability of a qualified retirement plan to both or either person will impact the deductibility of the contributions.

The Advantage of Tax-Deferred Growth

Let’s assume that Josh invests $5,000 into his IRA every year, beginning at age 35.  After 30 years, Josh is age 65 and has made a total investment of $150,000.  We’ll also assume that he earns the same 8% return on his investments every year.  Finally, we’ll acknowledge that Josh is in the 25% marginal tax bracket.  Let’s see how his money would grow.

Total Contribution IRA Value Non-IRA Value
$150,000 611,729.34 $314,256.29

Now, let’s assume that, at age 65, Josh takes all of the money from his account in one lump sum.  How will taxes impact his retirement?

Total Contribution IRA Value Non-IRA Value
$150,000 611,729.34 $314,256.29
Taxes Owed on Withdrawn Amount $152,932.34 0
Total Spendable Funds $458,797.01 $314,256.29

Obviously, I think that we will agree that Josh is better off with the after-tax value of his IRA than he would have been had his account been subject to taxation for the entire 30 year period!  You can use a number of different financial calculators that are available on-line to see the advantages of tax deferral in your own specific circumstances.

Withdrawal of Money

As shown above, funds in an IRA are subject to federal income tax when withdrawn from the account at or after age 65.  But, if those funds are withdrawn before age 65, the proceeds are not only subject to income taxation, a 10% penalty will also be collected for a “pre-mature” withdrawal!  While there are some circumstances under which the 10% penalty will be waived, clearly, these accounts are intended to be left untouched until retirement.

Next up … ROTH-IRA’s

Planning For Retirement … the ultimate level of unemployment – Part 1

Long ago and far away, in a time and place where cars sported lots of chrome and fins, the head of household (we’ll call him Joe) got out of bed each morning and went to work at The Big Company, Inc.

Joe started working at The Big Company right out of school and it was understood that he would work there for his entire career.  When he retired, The Big Company’s pension plan would send Joe and his wife a pension check each month that would allow them to enjoy their golden years with some degree of comfort.  The Big Company accepted the responsibility for investing the right amount of money each year to ensure that Joe’s retirement (along with the retirement of all of Joe’s fellow workers) would be safe and secure.  Joe could count on that pension check arriving like clockwork each month and he could never outlive that income.  That’s just the way things worked “back then”.

Today, Joe’s grandson (affectionately called Joe3 by family members faces a much different employment future.  The Big Company (TBC) no longer offers its employees a pension plan.  Instead, TBC invites its employees to contribute money into a Qualified Retirement Plan.

This Qualified Retirement Plan allows TBC to deduct money out of Joe3’s paycheck each week.  Joe3 decides how much will be taken from the check and how that money will be invested.  While TBC makes sure that there are many options for Joe3 to choose from, Joe3 is responsible for selecting his investments and monitoring them from month to month and year to year to make certain that he sufficient money to fund his own retirement.  If he plans well and the investments perform well, Joe3’s retirement should be safe and secure.  If he fails to put enough money into the plan; or, if the investments don’t perform as well as he had hoped and he has too little to retire on … oh well, that’s Joe3’s problem and TBC has no responsibility or culpability for the shortfall.

Since it’s Joe3’s responsibility to make sure he has enough money when he retires, we’re going to take a look at the different plans that Joe3 can choose from; the opportunities that those plans offer and the limitations that are included in those plans.  In Part 2, we’ll look at one of the most prevalent Qualified Retirement Plans … IRA’s

What Your Family Needs to Know When You Die (Part 5)

In the days and weeks following your death, your family will be looking for information about any benefits to which you and they are entitled.  You can make this search easier for them by providing the following information for them.

  • Group Insurance Benefits – if your employer provides group life insurance, let your family know the name of the insurance company and who the primary contact person is at work.  This will probably be someone in the Human Resources (HR) Department who will be able to help your survivors file the necessary paperwork to collect the benefits provided by the group policy.
  • Individual Life Insurance Benefits – there once was a time when employees remained at the same employer for their entire working lifetime and that employer’s group benefits could be counted on to help the employee meet all of his or her needs.  That is no longer the case.  While I would never tell a person to refuse the insurance that the employer is paying for, I would also encourage that person to have life insurance that he/she owns and controls; life insurance that will stay with him/her when they are no longer a part of the group.  Once again, make sure your family knows the name of the insurance company that you have purchased life insurance from, the name of the agent from whom you bought it, and the address/telephone number of the company’s home office.  Keep the policy in a safe place (i.e., a fireproof lockbox) at home.  Many people believe that the policy(ies) should be kept in the safe deposit box at the bank; but, if the bank learns of the death before your beneficiaries get the policy out of the box, that box can be sealed until it has been “inventoried” for estate tax purposes
  • Any associations to which you belong that may provide benefits – many associations and professional organizations offer benefits to survivors as a benefit of membership.  Make certain to list out all organizations to which you belong and any benefits that your know they provide along with contact information for each one so that your survivors can easily claim those benefits.
  • Homeowner’s/Renter’s Insurance and Auto Insurance – the name, address, and contact information for your agent along with the name of the insurance company and its home office address and telephone number should be listed along with the information regarding individual and group life insurance policies

The days and weeks after your death will be a difficult time for your survivors.  You have the ability to make this time a little less trying for them by planning ahead and making certain that they know where the plan details can be found and who to contact for help in putting that plan into action.  There are few love letters that you can write to your family that will be more appreciated than the one that begins, “I know this is hard for you, but I’ve done all I can to make it a little easier for you …”

SETTING GOALS FOR A NEW YEAR

It’s that time of year again.  The ball has fallen.  The decorations have been taken down.  The confetti has been swept up.  It’s time to face the reality of a new year  with the clean slate upon which each of us will write the story of what we do in the next 365 days.

I like watching old movies and there is a scene in a movie where the captain of a ship instructs his navigator to “plot a course thataway“.  Can you imagine the thoughts that must have gone through that poor navigator’s mind?  “Thataway?  Whichaway?”

The navigator in our minds needs to know where we want to go and what we must do to get there.  He/She needs goals.  So, in order to give your mental navigator the guidance needed, let’s take a few minutes to focus on goal setting and what helps us set goals that take us where we want to go.  What are the characteristics of goals that truly take us to the destinations we want to reach?  Goals should be …

  • Written down and made public – a quick search of the internet will yield a multitude of websites designed to help us set goals.  Some tell us to write them down on a piece of paper.  Others instruct us to record them in a page on-line.  Still others will suggest that we post them on one or more of our social media pages.  Whichever method we choose, the important thing is that we have them written down someplace so that we can see them regularly.  Making them public doesn’t necessarily mean that they must be posted to social media; but, it is important that others know about them and will hold us accountable for them.
  • Believable – for a goal to truly motivate us, we have to believe that we can achieve it.  W. Clement Stone wrote that, “Whatever the mind of man can conceive and believe, it can achieve”.  To believe, we must be able to visualize ourselves reaching the goal and feeling the satisfaction that will come with the achievement.

I once knew an agency manager named Ray who measured his own success by the number of individuals that he recruited, trained, developed, and promoted into leadership positions in the company he worked for.  One day, he asked a young man what his ultimate career goal was.  “To become an agency manager and replace you” was the young man’s answer.  While some would have thought that to be an arrogant and presumptuous answer from someone just entering into a career, Ray grinned and invited the young man to come into his office and sit in his chair.  Then, Ray took the young man’s picture while he was sitting in that chair, handed it to him, and told him to put that picture on the bathroom mirror where he would see it every morning while he was shaving.  “That will remind you, everyday, why you are getting up and working hard”, Ray told him.  He made it possible for that young man to literally see himself reaching the goal that he had set for himself.

  • Specific – Goals that are vague (“thataway”) aren’t really goals.  They are vague suggestions that provide no ultimate end point.  One person says, “This year, I’m going to lose weight”.  Another person says, This year, I’m going to lose 25 pounds”. Who do you think will be more likely to attain the goal?  Specific goals require that specific actions be taken.  “To lose 25 pounds, I’m going to stop taking “seconds” at dinner; skip desserts; and, walk for 30 minutes every evening”.
  • Measurable – For a goal to truly motivate us, we have to be able to see how we’re progressing toward it and to know when we’ve reached it.  Let’s assume that the goal is to create an emergency fund that has 2 months of actual living expenses in it.  Since we know that our basic living expenses are $2,000 each month, we know that we need $4,000 in the fund.  Each month, we deposit $167 into the account and, when we get our bank statement, we can see the balance increasing by not only the deposits we make but by the addition of interest as well.  Viewing the increasing balance each month allows us to measure our progress toward reaching the goal.
  • Challenging – Our goals need to be big enough to make us stretch.  Doing just enough to get by may keep our heads above water, but it won’t help us grow.  The sales person who knows that by doing the same thing every year he can reach his/her quota won’t grow and advance.  But, the sales person who challenges himself/herself to increase sales by an amount that requires a bit more effort is the person who rises to the top of the organization; both in terms of professional responsibilities and financially.
  • Inspirational – As the great motivational speaker Jim Rohn once suggested, setting the goal of earning enough to pay our bills may be a goal, but it seldom inspires anyone.  Goals that inspire us to “go the extra mile” lead us to greatness.
  • Have deadlines – Ray, the agency manager referred to above, told everyone that “goals are simply dreams with deadlines”.

“Someday” is not a deadline.  “Someday” is a dream … an illusion … a mirage that may appear to be leading us somewhere we want to go; but, is really leading us to nowhere.  When the young man above told Ray that his goal was to be an agency manager and replace Ray, he was told to set a deadline … when was this going to happen?

The young man set a date … exactly five years from the date on which he was hired.  Did he replace his mentor?  No.  But, exactly three years after the date on which he was hired, he was appointed as the agency manager for an agency that was struggling.  He’d reached his goal of agency management; and, somewhere, I believe that there is a picture of him sitting in a chair just like Ray’s.

If the story of this new year in your life is to have a happy and satisfactory ending, the course you plot will be guided by the goals you have set.  If you have not already done so, today would be a good day to begin writing down your goals.  Some should be long-term goals (where you ultimately want to end up) and some should be short-term goals.  There will be professional (career) goals and there will be personal goals.  Some of the goals will be big goals and some will be small goals.

Short-term goals may be things that you want to accomplish within the next week; the next month; the next year.  Short-term goals may be way stations on the road toward your long-term goals.

Professional goals empower us to grow within our chosen vocations.  Personal goals enable us to become better spouses … better parents … better people.

Big goals could be long-term goals but are not required to be long-term.  Small goals are little things that help us feel we are making progress.  Don’t underestimate the importance of these small goals.  There is something incredibly satisfying and motivating about being able to go down our list of goals making check marks as we say “got it … got it … got it”.  The more often we are able to say “got it”, the more motivated and inspired we become to continue working toward the attainment of the goals still unchecked.

One year from today, each of us will look back at what we have accomplished.  Will we like what we see; or, will we look back with regret for what might have been?  Only you can determine what you will see.

Make 2012 your best year yet!

What Your Family Needs to Know When You Die (Part 4)

The assets you listed in the last installment are only half of your personal balance sheet that your family will need when you are gone.  The other half are your liabilities … the debts you owe to others.

  • Mortgage – for most families, the mortgage on the family home will be the largest debt that is owed.  Your family will need to know the name of the mortgage lender and its address; the loan number; and, the current balance owed on the loan.  If there is more than one mortgage on the property, be sure to list any other lenders and the appropriate account numbers.  Be sure to list the monthly payment that is due on each mortgage.

This would also be a good place to list any life insurance policies that you may have purchased to provide the funds to pay off the outstanding mortgage(s).

  • Auto Loan(s) – provide your family with the name of the lender along with the lender’s address; the account number; the current balance owed on the loan; and, the monthly payment that is due.  If you have purchased any loan cancellation insurance, you should list it here including the name of the insurance company, its address, and any person with whom you regularly have contact.

You should also list here the name of the company that insures your vehicle(s) along with the name of your agent and the policy number so that the company can be notified of your death.

  • Credit Cards and Personal Loans – in a perfect world, no money would be owed on unsecured debts.  However, few of us live in “Perfect World, USA” so list all of your personal/signature loans, credit card accounts, addresses for each account, the account numbers, and a current balance on the account.  Also, indicate where you keep your current statements and balances owed on each account.

A person’s death does not wipe out any debts that are owed.  Creditors have the right, and they will exercise it, to make demands for payment against your estate.  Sadly, there are some who will attempt to take advantage of survivors’ grief and confusion to make money by making claims against the estate for debts that do not exist.  By leaving a clear inventory of debts owed, you can protect your family against these bogus claims.


What Your Family Needs to Know When You Die (Part 3)

When you are gone, your family will need to know a great deal about your personal finances.  They’ll need to know about your assets and your liabilities.  Today, we’ll look at assets.

Assets are the things you own that have value; perhaps generate income that can be used to support your dependents.  Your family will be helped tremendously if you assemble an inventory of your assets.  Consider the following …

  • Bank and Credit Union Accounts – do you have a checking account; savings account; certificate(s) of deposit; safe deposit box?  If you have any of these assets, list the name of the financial institution along with its address; account number(s); and, the name of the individual with whom you most frequently do business.
  • Stocks, Bonds, and Mutual Funds – if you have investment accounts, your family will need to know what assets your accounts hold; i.e., the names of any individual stocks, bonds, or mutual funds you own along with the name of the Registered Representative and firm with which you do business.
  • 401(k) – if your company offers a 401k … other qualified retirement plans include 403(b) plans, tax-sheltered annuity plans, and 457 deferred compensation plans … be sure to include the name of the plan administrator with the administrator’s address and telephone number; the name of the person at work who is your primary contact regarding the plan; and, a recent statement showing how the funds are invested and current balances.
  • Real Estate – obviously, the first item on this list would be your house.  Be sure to include a current estimate of the property’s value.  You can obtain a current value from a Realtor; or, do an on-line search by typing in the question “what is the current value of my house”.  Your search should yield a number of websites that will help you estimate its current market value.

The list of assets above is certainly not all-inclusive.  You may own art, collectibles, firearms, jewelry, and many other things.  Be sure to include these items in your list of assets along with their current market value.  If these items have been professionally appraised, include the most recent appraisal.

The days, weeks, and months following your death will be trying times for your family.  They will be grateful for any help you provide for them that will help them put together the financial pieces of their lives.

An Old Idea is New Again

Once upon a time, in a time and place long ago, Santa never bought presents for all of the good boys and girls with plastic money.  He only used green pieces of paper with pictures and numbers on them.  When he didn’t have enough green papers, Santa would tell the store what he wanted to buy and ask the store to hold it for him.  Each week, when he got paid, Santa would go to the store and give the manager some money as a partial payment on the toy that the store was holding.  When the toy was completely paid for, Santa would take it to the North Pole and have the elves wrap the present and put the name of the child for whom it was intended on the package.  The North Pole was a very happy place.

One day, an ogre gave Santa a piece of plastic and told him that he no longer had to take green paper to the store.  He could fill his sleigh with all the toys it could carry and not worry about the green papers.  In fact, he wouldn’t need green papers for a long time.  Over time, the North Pole became a very sad place.  There was never enough green paper and Santa received calls at all hours of the day and night from angry people demanding that he give them green papers immediately; lots of green papers that he didn’t have.

Finally, the head elf approached Santa with an idea … stop using the plastic … give the angry people green papers until all of the plastic bills were paid in full.  Then, ask the stores to hold the toys and allow him to bring a few pieces of green paper to the manager every week.  When the manager had received enough of the green papers, Santa could bring the toy back to the North Pole and have the elves wrap it in bright paper with shiny ribbons and bows.

On the day after Christmas, with no plastic swords hanging over his head threatening to make the coming year unpleasant, Santa could begin planning for the next year and getting presents ready for the good boys and girls.  The North Pole was once again a happy place and Santa could enjoy each day of the year as he looked forward to the next Christmas Eve.

“… Making A List and Checking It Twice …”

Whether you celebrate Christmas, Hanukah, Kwanza, or another holiday, the holidays are a time of gift giving.  For some, the temptation is there to spend more than the budget really permits.  Here are some tips for managing gift giving expenses.

  • Make a list of those for whom you intend to buy gifts and set a dollar limit for each one.  The price of the gift is never indicative of your love or respect for the recipient.
  • Shop early … don’t wait until the last minute to go shopping.  Shopping early and often gives you the opportunity to comparison shop and make certain that you are obtaining the best price on the product you’re purchasing.  It also affords you the luxury of not being pressured into buying “what you can get” rather than “what you want to get”.
  • Large, extended, families may decide, as a group, to draw names and only buy a gift for a limited number of people (perhaps only one person) rather than for every family member.  My friend Brenda tells me that her family elected to do this; and, that it allows each family member to give a special gift to each person on their exchange list rather than having to give small inexpensive gifts in order to stay within budget.

As we move into the month of November, Santa is not the only one who should be making a list and checking it twice.  A little bit of planning now will empower you to enjoy the spirit of holiday giving without fearing the costs.