Sunday, December 18, 2005

Special Saving Account Christmas Club Savings

Special Saving Account, Christmas Club Savings

Do you struggle with paying for Christmas? Do you have an annual property tax bill that sneaks up on you every year and you don't know where the money is going to come from. One of the best tools that I have found to handle these types of annual expenses is a special savings account or Christmas club savings account.

Most banks or credit unions will set these up for you and it allows you to specify an amount of dollars each month that will be taken out of your savings account and put into the special savings account. Most of the time you can get to the money either through and online transfer or by going to the bank and transfering the funds. There are no penalties for early withdraws and it is a great way to budget your money.

It is a great feeling when you have put away $200 per month for Christmas and the bills start rolling in and you simply transfer the money from the special savings or Christmas Club to the checking account to write the check to pay off the credit card.

What are some of the expenses you could start a special savings account for:

  1. Christmas is probably one of the most popular special savings accounts. Even $50 per month will give you $600 to help pay the bills next Christmas. Goto the bank now and setup the account to start in January.
  2. Property taxes: If you do not have an escrow account than you need to pay your own house property taxes and insurance bill. I always hate getting these bills and they always seem unexpected. However, they always come at the same time every year. Do the math, divide the annual property tax by 12 and set aside in the special savings the amount per month you need. You really don't need more that one special savings account but you do need to account for all the different bills that you are saving for.
  3. Vacations: Another big expense that people usually just put on the credit card is the vacation. Why not save for it automatically instead of paying it off over time at 18% interest rate.

I realize this sounds like an easy concept if you have the money and a tough concept if you don't however, try it on one expense at a time. After you have paid of that expense with one years of savings you will be looking for other items to add to the special savings account. You really don't even need a years worth of savings. Even 6 months helps, start an account now for that summer vacation, when you can increase the amount to help save for Christmas.

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