Pay debt or sink fund??

**kbradshaw** · 08-27-2011, 01:00 AM

If we have a $5000 debt yet want to budget for a Christmas fund of $1000 expense and get an unexpected $1100 in the mail, should we pay all of it towards the debt or create our sink fund?

**Palooka** · 08-27-2011, 01:09 AM

Originally Posted by kbradshaw

If we have a $5000 debt yet want to budget for a Christmas fund of $1000 expense and get an unexpected $1100 in the mail, should we pay all of it towards the debt or create our sink fund?

Assuming you're done with BS1, put it all on the debt. A thousand for Christmas seems pretty high to spend being in debt.

**HelloK** · 08-27-2011, 04:18 AM

I'd say half and half, since you'll end up doing both.

**khaski** · 08-27-2011, 08:27 AM

I agree with both posters- see if you can whittle down the Xmas budget a bit (buy second hand gifts, hit the clearance shelves for toys @ Walmart, cut back the amount per person) and some for that, put more down the debt.

If you can figure out how to budget to meet your Xmas goal before ten, put 2/3 or so on the debt.....$500 saved for Xmas will not really earn you interest, but $500+ an extra $200 or $300 on debt will save you significant interest payments, depending on your rates. Paying it down faster means saved interest costs, and the payment shrinks, freeing up more $.

**cheryl65** · 08-27-2011, 11:22 AM

I also agree somewhat with both and think splitting it down the middle is the way to go!

**gmarie** · 08-27-2011, 02:28 PM

I agree that spending $1000 on Christmas is high if you are in debt. But, I think the allocation of the $5000 - and your Christmas spending should depend on how much you have for your monthly snowball, and if you have completed BS1. You can always post your budget for feedback!

**Libby** · 08-27-2011, 03:00 PM

Originally Posted by kbradshaw

If we have a $5000 debt yet want to budget for a Christmas fund of $1000 expense and get an unexpected $1100 in the mail, should we pay all of it towards the debt or create our sink fund?

Do you have a current plan in place (ie budget that you actually follow) which allows you to do both: pay down your debt and build up your savings for Christmas?

If YES - then split the money 50/50. This will boost you towards both of your goals.

If NO - put about 80% - 90% of it on the debt so it gets paid down and the remaining to Christmas.

[Please note: I view Christmas as a 'want' not a 'need'. In order to obtain my 'wants' I save up for it throughout the year IE: I want to buy gifts for friends. I want to host a family meal. I want to travel to see friends.]

**mh3rdwheel** · 08-27-2011, 05:24 PM

I also think that a $1,000 for xmas is alot, when the kids were in school i only bought them 6 gifts, and only stuff they asked for, one might be a little expensive.

Now I buy them a really nice gift each. I want nothing in return only for them to show up.

**kbradshaw** · 08-27-2011, 08:11 PM

Thanks for all the great info! BS1 is complete, we did have sink fund started but that ended up paying for an unexpected surgery, trip across country to be in a wedding (and all associated wedding party expenses ie: dress, shoes, etc) and a fence so what we had is gone. We don't have kids yet (for 2 more months) so our Christmas budget is for each other, both sets of parents, both sets of siblings and all nieces and nephews and a few very close friends. We have decent sized families so we budget about $20 per person, more for parents and each other and definitely shop on clearance WITH coupons to maximize our gift giving abilities within the budget. I think we'll split it 1/2 & 1/2 - make a principal car payment and start shopping early with the summer clearance sales for Christmas gifts!

**gmarie** · 08-28-2011, 09:51 AM

My husband has 12 nieces & nephews, so I understand what it is like to feel obligated to buy for all of them and the stress it can cause! My family is very understanding and simple, his not so much! We are finding that theme gifts (meaning same of everything but a little different) work well. Last year we gave personalized aluminum water bottles and the kids and adults loved them. I think they were about $12 each. We then gave a small family gift to each family in addition to the water bottles.

For my husband and I... after the first few times he cleaned out our checking account to buy me expensive gifts, we instituted a $100 limit for Christmas, and it has worked very well for us. For my birthday this year, he gave me really thoughtful coupons and made me dinner... I can't wait to cash in the coupon for him to do the laundry when I need a break!

**Mojjo** · 08-28-2011, 10:19 AM

I would split it between the two. I'm a big Christmas giving fan and with your family size it's not unreasonable. But I would definately work on the debt too so splitting seems the most reasonable.

**mateosbaby** · 08-28-2011, 11:01 PM

My dh has a large family - there are 4 siblings, plus a spouse for each, his parents, and there are 15 grandkids on his side! 4 of those are ours.

Plus there is my side - there are grandparents (4), an aunt & uncle, I have 2 siblings, plus there is a spouse, plus 2 nephews, plus my parents are divorced, but only 1 is remarried. That makes 39 people. I'm sure I'm missing someone.... Oh! We also do a cousin drawing, so we each get a name from my side of the family, for 2 more. 41 altogether. What we do for my dh's side's nieces/nephews is only buy a "real" gift for our sponsored child. That is 2. The rest we get candy or flavored chapstick or whatever. We budget $10-$15 for each of those sponsored kids and my 2 nephews on my side. Our parents get $15-$20 each. Siblings & spouses get a combined gift, if possible, $15-$20 each set. Our own kids get like $25-$30 or so. We attempt to spend that amount on each other, as well, but that hasn't always happened.... :-/ I can totally understand how Christmas gets to be $1000! When you add in gift wrap, food, cookie making, party (if you have one or even just invited to 1 or 2), tree, plus the extra electricity for all the lights.... Yeah, it really adds up.... Crazy how much money Christmas costs! I actually added up all this last year, and we decided not to throw our annual Christmas party because it was just too expensive. And it was still nearly $1000!

We'd go cheaper on gifts, but we are kind of "obligated" to spend at least not a "cheap" amt on everyone because they are much more worldly/materialistic than we are, unfortunately. We'd love to throw Christmas out the window (well, maybe a gift or 2 for the kids, but that's it), but that won't happen - ever.

Anyway, all this to say, I totally understand how Christmas can cost that much, even while trying to get out of debt! It sucks....

**my4littlebuffaloes** · 08-31-2011, 01:01 PM

I would split it in half and then with your $550 set aside for Christmas - I would cap the budget there for Christmas. that should be plenty. Also, have you thought about family gifts? A membership somewhere for $70 is cheaper than 5 $20 gifts, ya know? And if the neices and nephews are young, keep it under $10 - they don't know and don't care.

**khaski** · 08-31-2011, 01:16 PM

My friend's family, as more and more grandbabies arrive, opted to just give gifts tot he kids, not the adults. Other families pull names....you might suggest a way to whittle down the amount of gifts, your generosity is sweet but you cant' afford. We have 3 kids, 2 sets of parents,1 sibling, and a few close friends + their kids to buy fro...and we spend about $1k a year, and it is FULL up under that tree each year, just in our household! You mention about $20 a person, with some work, you could do $10-15, even if you kept them all on the list, cutting hundreds off your Xmas budget.