Licensed Insolvency Trustee Colin Boulton recommends saving up for your winter expenses.
With summer vacation over and back to school costs out of the way it’s a good time to think about what your next big expense will be. The key to debt free living is being prepared. When it comes to expenses, you don’t want to be caught off guard when it’s time to make an important purchase or pay an “unexpected” bill.
Licensed Insolvency Trustee, Colin Boulton has met with many people who have been caught by an expense they were not prepared for. “Sometimes, getting a big bill out of the blue will snowball into a big debt problem. A problem like this can be difficult to clear up without savings. People who practice debt free living always try to include what we call “irregular” (unexpected or infrequent) expenses in their budget.” He explains.
So – how do you budget for expenses you either pay infrequently – or don’t even know about?
How to budget for irregular expenses
“Budgeting for expenses you don’t have to pay on a regular basis is a lot simpler than you might think.” Colin explains.
“We have a simple process for this type of budgeting, we explain it during our bankruptcy and consumer proposal counseling sessions. Even if you aren’t sure what you’re doing about your debt at this time, you can benefit from this budgeting skill too.” Says Colin.
1. Brainstorm all the things that cost you money during the year that are not typical. If you’re having trouble, look over your bank statements for the past 12 months.
2. Once you have your list, add up the cost of all these expenses.
3. Divide the total by 12 months – this is how much you should save towards these costs every month. You can even divide this number by 52 weeks if you are paid weekly, or 26 if you are paid bi-weekly and put this amount into savings every time you get paid.
What are the typical “winter expenses” to consider?
“People don’t always think about getting ready for winter as an extra expense. Maybe not every year, but budgeting can really help with the financial burden.” Says Colin.
“Living debt free is more than seasonal, it’s a year-round effort. You’ve got to budget and watch for opportunities to save money to stay ahead.” Colin explains.
Here is a list of common winter expenses:
Vehicle costs – snow tires, necessary repairs, windshield wipers, fluids, winter inspections from your dealership. Prepare your car for winter and be safe on the roads.
Utilities – heating costs increase in the winter months. Electricity can go up too with shorter days and family spending more time at home indoors.
Transportation – if you bicycle to work, you may not want to in the winter – prepare for increased costs taking transit or driving to work.
Clothing – while you may not need a new winter jacket and boots every year, you will have to replace these items from time to time. Budget for new warmer clothing items and make sure you have everything you need to survive the cold.
Home repairs – save up for any repair work that needs to be completed before it gets cold. Drafty or broken windows, weather-stripping that needs replacement, a roof that needs to be replaced.
Special occasions – if you love to go out on the town for New Year’s Eve or buy a lot of gifts for others during the holidays, budget for this. Figure out how much you typically spend and try to save up before you will need to spend the money.
What to do if you’re coming up short
“If you’re coming up short in your budget, you have a couple of options. First, you can try adjusting what you spend your money on. Second, you can seek help if you have debt.” Colin explains.
“Try your new budget out and see if it works. If you still can’t afford living costs, savings and obligations – speak to someone about your options.” Says Colin.
If you would like to meet with one of our LITs to discuss your options, please call 310-4321. Book a free, no-obligation consultation today. Debt free living – you owe it to yourself.