What It's like when You Can't Afford Christmas Gifts for Your Family

In 2013, I wrote an article for Yahoo! about what it's like when you can't afford to buy Christmas gifts for your family. While the economy is improving, I know that many families are still hurting, so in honor of them, and the journey that I have been on these past few years, I am republishing my original post, here, on my own blog. I hope that it helps others that are struggling to know that they are not alone, and that like the old proverb says, "tough times don't last, but tough people do."

As Americans, each of us has a story of obstacles that we have overcome, it is part of our national identity I believe, and part of being human. If you have a story of a difficult Christmas that you have experienced in the past, or are experiencing now, why not share it with our readers in the comments section below?

Originally published on Yahoo, for Christmas 2012:

I lost my job of seven years a little over 20 months ago during the "Great Recession." I exhausted all of my unemployment benefits this past spring, and while I've been able to pick up some extra cash doing some freelance writing and my husband is still employed, it has been a very tough year financially. We've been struggling just to keep the lights on and keep from losing our home. Struggling to pay our bills makes it even more difficult to cope with unemployment and underemployment. There simply is not any money for Christmas gifts this year.

I know the true spirit of Christmas is not about how many gifts are under the tree, and even though my children are older and can understand, it still hurts to not be able to give them even a moderately priced gift. This year, I scoured some local used book sales and an area Goodwill to buy a few books by their favorite authors at $1 to $2 a piece to have at least something to wrap up for them, and I can't help but feel ashamed that I can't do more.

I have two beloved young nieces that I don't get see very often that I normally splurge on at Christmas, as I love to see how excited they are to unwrap their gifts from us. This year, not only will there not be gifts, we don't even have the gas money to go see them.

We've only had one other difficult Christmas that we couldn't afford gifts, back when I had cancer and my children were very young -- and a co-worker's family and friends surprised us all by adopting my children for Christmas that year. I am still grateful for their generosity, but it still hurts to be in that situation.

I know many other families are going through this same situation. I know I should be thankful my children are older and understand. I know I should be more thankful for what I do have -- but knowing this doesn't take away the pain, and the shame, that I feel at not being able to afford to do more for my family this year.

Still, despite these difficult financial circumstances, I find that I am grateful this Christmas. While there will not be any presents under our tree this year, or likely a tree at all, I am thankful for my friends and family, and the love and wisdom that they share, that makes it possible to weather this season with joy and peace in my heart. Sometimes, the best gift that you can give yourself during the holidays is simple gratitude.

Photo Credit: jpoirrier

A Debt Free Christmas – the Gift that Keeps on Giving

In the past, how many times have you blasted through your budget in order to splurge on Christmas gifts? In this past, this has been an area where I and other members of my family have been financially irresponsible, but no more! A few years ago, we were forced to take a hard look on our holiday spending when I lost my job. Out of necessity, I learned many financial lessons. Including the importance of not going in debt or otherwise excessively spending during the holidays.

A few years ago, Yahoo! asked myself and several other contributors to write about our holiday spending. The following is the article that I wrote and that they originally published. Many of these lessons remain sound, so I am republishing the article here with the hope that it will help others see that a debt free Christmas is truly the best gift that anyone can give themselves and their family.

According to a recent American Research Group, Inc. poll, Americans plan to increase their holiday spending this year with many planning to spend an average of $854 on gifts. Many will put this and other holiday expenditures on interest bearing credit cards, which will lead to increased costs. Over the years I've found that the best gift that I can give myself and my family is a debt free Christmas.

As a parent with four children, and many nieces, nephews and other important persons in my life, I've used a variety of strategies to hold down costs at Christmas. While in the past I may have splurged a little to put a much desired toy or gadget on credit that is simply not a possibility this year with the loss of my job, medical bills, and other health issues. How then am I to celebrate the season without being a Grinch?

Start Saving Early

Normally we begin saving our lose change in January to save for Christmas gifts. Our bank offers a savings program that automatically "rounds up" one's debit card transactions to whole dollars, depositing the difference into a savings account, and by the time November or December rolled around, we would have a sizeable amount to fund our Christmas purchases. This really is a great way to save in a relatively pain free way to pay for Christmas Gifts and it is my preferred way to save. This year our finances have been so strained that these funds have been used to pay day to day bills. Still, I am determined that we be able to exchange gifts in our immediate family and follow through with our annual commitment to fill a shoebox with gifts for a needy child.

Investigate True Interests

My children are older, in college, and in no real need of new gadgets or toys. In finding gifts for my children and my husband, I have been paying more attention to what things truly interest them. Most of us are avid readers, and while books can be a great gift, they are also expensive. After discovering some of their favorite authors, I've been looking for gently used copies of their books. Even many popular authors have earlier works that fans may have not read, and it can be a treat for a fan to say they have read all of the books by a certain author. Smaller, private booksellers as well as online sources such as Half and Amazon are great sources to find deals on pre-owned books.

Earn and Redeem Points and Use Coupons, Discounts and Sales

Others in my family enjoy gourmet coffees and teas, specialty bath products, or chocolate goodies. I've been redeeming points that I have earned from regular purchases for gift cards at some of their favorite retailers and combining them with the sale prices these retailers are offering this holiday. Many bank cards offer points for purchases, and there are other companies that offer points for reading emails or participating in limited free trials of services. My favorites are the rewards points program at Kmart and Sears as well as the MyPoints program, but there are many other points programs available that you can find by doing a simple online search for "earning points."

Homemade Shows Love and Can be Frugal

I've also been using common items and ingredients I have around the house to make some simple homemade beauty and bath products. You can find detailed instructions on how to make many different types of facial scrubs, beauty bars, bath melts, bath salts, lotions and more by doing a simple search online. You can find decorative containers at a local discount store or save some from your favorite products through the year. I make several of each type and put them in a simple basket from a discount store and garnish with a bow. I also make treat bags and fill them with homemade cookies and breads and cakes for my older relatives that I bake ahead and freeze earlier in the month.

Using these strategies, my Christmas shopping is done for my immediate family, nieces, nephews, in-laws, aunts and uncles. I have spent around $50 in cash; the rest has been gift cards and time. As little as we get to see each other through the year, I hope that the focus this Christmas will be on time rather than money.

What about your family? Are you going to splurge and go in debt or spend your savings on lavish presents for your loved ones this season? Why not share with our readers in the comments section below your shopping plans, and strategies that you follow to keep on track with your budget during the holidays. 

Photo Credit: Alan Cleaver

How We Stay Warm and Save Money on Electric Bills in the Winter

So far, this winter is shaping up to be a brutally cold one, with record low temperatures being recorded all across the country. I have baseboard electric heat, so it's really difficult to afford our electric bill in the winter.

It' not just the high costs for electricity in the winter that make me dislike this season. In my part of the country its cold and the snowfall and ice make it treacherous to go to work or the grocery store. I know there are far colder locations in the U.S. in the winter, and I plan to stay as far away from them as possible.

I use the following strategies to keep warm and save money on the electric bill in the winter.

Winterize the Home in the Fall

I have written about my fall maintenance list in an earlier article, but performing some simple tasks in the fall help to lower my electric bill in the winter. Each fall I replace cracked window panes and caulk where the sash meets the trim on all of the windows. Install storm windows or plastic film covers over the windows to keep in the heat. The materials for these repairs are normally less than $20. 

I have baseboard heat, one of the most expensive and least efficient ways of heating one's home. I make certain to remove the panel on the front of the register and thoroughly dust the heating element so that it is clean before the season starts so it works more efficiently.

Years ago, I also made window and door "socks" out of scrap material and sand and I layer these on the window sills and place them along the bottom of the doors to keep the cool air out and the warm air in.

Cut Down the Thermostat and Dress in Layers

Many people have probably heard this one before, but it is really not necessary to crank up the heat at the sign of the first chill in fall. I put a timer on our hot water heater years ago and swapped out the incandescent bulbs to CFLs and cut my electric bill by a third the first year of this change.

I also turn off the heat and close the doors to rooms that are unused. Heating a smaller space reduces the electric bill. Many people have probably heard of these tips, but I do have a few more to resist turning up the heat when the temperatures drop.

Make Insulated Covers for Windows and Doors

While I do have curtains that I put up in the winter that have a special backing that works as insulation, one year I made an additional insulated hanging that I use over all of my windows and doors in the winter. You can use basically any heavy, thick material, but I used some fuzzy old blankets that had faded over time. I sewed a seam at the top so I could thread them through a spring tension rod, and I hung them at the top of the windows, and used a regular curtain rod to hang them over the entrance ways into my home. This extra covering reduced my electric bill by an additional 10% the winter that I first made them. 

When I first made them, I didn't like the idea of mismatched patterns being viewed from outside my house, so I got some acrylic paint, some fabric paint fixative and a foam brush from the crafts section of my local department store. For under $5 I was able to paint over the designs and these insulating cloths resemble the cream colored sheers that I normally hang under my curtains, so no one notices the difference.

Dress in Layers, Including the Bed, and Make a Hot Toddy

To me, if it's cold, it just makes sense to dress warmly when inside, in layers, and apply this strategy when dressing the beds. I put several layers of blankets on our beds, and top them off with a down comforter. At night, we take empty two liter soda bottles that we have saved, and fill them with very hot water and seal the cap tightly. Save some empty bread bags to slide these bottles in and tie, in case the cap works loose in the night and starts to leak. I place 3 or four of these soda bottles under the covers at our feet just before we turn in and it knocks off the chill and keeps us warm throughout the night even when it's freezing outside.

I hope my readers found these tips useful. If you have other strategies to stay warm and save money on the electric bill in the winter why not share them with us in the comments section below?
This personal finance article written by Lyn Brooks original appeared on Yahoo! Finance and the Yahoo Contributor Network.
Photo Credit: Sandra Forbes "Sage" on Flickr

Cashing Out My 401(k) Early Was a Costly Mistake

It's tempting to cash out your 401(k) if you are facing unexpected bills or a layoff. Losing out on interest and other growth opportunities, however, isn't the only consequence of withdrawing part or all of your balance from your 401(k) plan, as this contributor discovered. Continue reading to learn about why cashing out a 401(k) account is a costly mistake. 

By Lyn Brooks, Writer

Most of us who have 401(k) plans are told upfront by our plan providers to avoid taking early distributions from our 401(k)s if at all possible.

When I lost my job in 2011, and had unexpected medical needs and fell behind on my house payment and other financial obligations, it seemed like the only option that I had to prevent foreclosure was cashing out my 401(k). Since I wasn't returning to work, I assumed that the value of my 401(k), combined with my unemployment benefits, would be less than my earned income from prior years, so I did not plan for any potential tax consequences. This was a mistake.

Most people are knowledgeable enough about 401(k)s to realize that every dollar that you take out of your plan is a dollar that has lost time that it could have been invested, compounding and growing. What you may not realize is that if you take an early distribution from your 401(k) there is a "special" federal penalty tax of 10% on early distributions.

While the investment firm I used held out 10% of the value of my 401(k) for federal income tax purposes, this does not begin to cover the federal tax penalty for the early withdrawal. Also, to make matters worse, if you have taken a loan on your 401(k), and you do not pay it back before leaving your employer, the amount left due on the loan is also counted as a taxable early distribution and is also subject to the 10% penalty.

Each year I have always managed to earn a refund on my federal tax return, but in 2012 I had to come up with a little over $2,500 by April 17th to avoid the additional penalties and interest on my federal tax bill. While my total earned income from the 401(k) distribution and unemployment benefits was less than I usually make each year, the 10% penalty is an unexpectedly significant amount. The entire amount due on my tax bill for 2012 was the 10% penalty for the early distribution from my 401(k).

I cannot stress enough that if you have a 401(k) and you are short of cash that you should try every way possible to avoid taking an early distribution from your plan. If you are like me, and you find yourself without a job and you have no other way, then my suggestion is to run the numbers at the time of your distribution and plan for the 10% penalty that will be due at tax time so you can go ahead and set it aside.

Luckily, my state does not also impose a penalty tax for early 401(k) distributions, but not all Americans are so lucky. My suggestion would be to check with your state to discover if there is also a state penalty tax for the early distribution and plan for that as well.

Since I was unaware of this penalty, I only found out what was due when I completed our taxes, which left less than two months to come up with the $2,500 that was due. A little planning on my part at the time of the early 401(k) distribution in 2011 would have made this a little less financially painful and certainly less stressful.

At the time that I took the distribution, I assumed that I would eventually find another job and easily be able to rebuild my retirement savings. I was very wrong. Three years later, I am now self-employed as a small business owner and struggling, with even less means to begin to rebuild my retirement savings. Cashing out my 401(k) early was not only a costly mistake, it was, perhaps the worst financial mistake of my life. By sharing my story it is my hope that others will learn from my mistake.

Photo Credit: 401(K)2013 and 401K Calculator

Apps and Sites that Let You Shop Without Money

By Lyn Brooks, Contributor

If you are short on cash, you might want to consider using sites and apps that make it easy to share, lend and barter to help you save money on everyday activities. 

Sites My Family Uses to Get What We Need and Want While Spending Little to Nothing in Money

The age old system of bartering to exchange resources is alive and well in America, and several apps and sites make it easy for my family to get what we need or want while paying little, if any, money.

I live in a family of book lovers, and we use to spend $50 to $100 a month on books, but not anymore. We've been able to exchange books for free with other members on BookMooch and Swap.com. Swap also allows you to swap video games, and DVDs, and you just pay for shipping. Both sites have really helped us to lower our cost for entertainment.

When my son moved 500 miles away to attend college in the city, he used Zipcar to rent a car for next to nothing when he needed one for special trips a couple of times each semester.

My oldest daughter saves money on name brand or designer clothing by using Swapstyle to swap clothes with others around the world.

We also use our regional Craigslist to find used items at a low cost. When I was unemployed and our refrigerator, stove and dryer all died within 17 days of one another, we were able to find replacements for $50, $25 and $20 through this site. The appliances look and work great and we are still using them today. Most Craigslist groups also have a Free section -- which is where we scored a free upright piano that was in pristine condition when our youngest daughter wanted to learn to play.

A site that we turn to frequently to find the items that we want and need for free is Freecycle, and the most interesting item that I have ever received also came from this site. This site has literally come to my family's rescue countless times.

Most of the items that I've receive through Freecycle have been fairly straight forward exchanges, but the very first time that I participated really stands out in my mind. One poster listed several bags full of boys clothing to give away, as long as you agreed to take away a "couple of leftover moving sale items as well," as the poster was leaving that afternoon to move to a new state.

I readily agreed and drove into the nearby city to collect the items. I arrived literally as they were closing the doors to their moving van and getting ready to drive off. A very nice lady loaded 3 large trash bags into the trunk of my car and said, "Whatever you can't use, please pass on to someone who can, just don't let it end up in a landfill." She then drove away in the moving van, and I drove home.

Once I got home, I started to go through the bags. In the first bag, there were several pairs of brand name jeans, that were barely worn and fit my son perfectly, as well as several pullovers and hoodies. My son basically had a new wardrobe.

In the second bag there was a really nice, lined khaki jacket with multiple pockets that is perfect for my husband's hiking trips. We looked it up and found that this particular brand costs several hundreds of dollars new, and it was in pristine condition.

In the third bag we found the most surprising and unexpected item -- mixed in with the lady's unwanted plastic storage containers and kitchen gadgets was an object that I didn't recognize. I speculated that it was perhaps some sort of musical instrument -- which made my husband laugh when he corrected me -- it was a pot bong! Of course, we didn't keep that item since its illegal, but it made the experience memorable!

All of these sites have helped us to drastically reduce the amount of money that we spend.

I love receiving feedback from my readers! Have you ever used one of these sites to get a low cost or free deal on something that you wanted or needed? Why not share your favorite sites and apps with your fellow readers so that they, too, can start saving money and begin to get out of debt?

Photo Credit: fontplaydotcom

How I Learned to Cope with Unemployment

Bread Line During the Great Depression 

While the economy has improved since the "Great Recession" began in 2008, millions of Americans are still unemployed or underemployed. Continue reading to learn more about how one contributor learned to cope with unemployment.

By Lyn Brooks, Contributor

In July of this year, the official unemployment rate hovered around 6.2%, but a new study conducted at Princeton University and released this August indicates that the true unemployment rate has been vastly understated by at least 1 1/2 to 2 full percentage points. Regardless of the actual unemployment rate, millions of Americans want to work but still can't find a job. Millions more are only working part time, or at a reduced rate of pay, so most folks are still facing challenging financial circumstances and learning how to cope with unemployment.

On "April Fool's Day" of 2011, I joined the millions of Americans who were fired in "The Great Recession." For the next two years, I submitted resumes, posted on job search sites, and notified every friend, acquaintance and family member that I was searching for a job, and received no job offers. It was hard to not become discouraged with results like that.

To me, the biggest challenge that I faced during that time was how to cope with unemployment. Suddenly, I had all of this unstructured time on my hands. It was so easy to fall into the trap of obsessing about being unemployed and turning to self-destructive behaviors such as over-eating and social withdrawal. The following are some activities that helped me to cope while I was unemployed, and I continue many of these practices today whenever I feel a bit stressed or pressured as a small business owner.

Walking

When I started to feel stressed out, I went for long walks. It's an activity that is free, burns calories, and can be done virtually anywhere. I live in a scenic town with walking trails; there are many parks and shopping malls nearby. When I can, I invite a friend to go with me, so I can combine socializing and walking. This is my number one activity to cope with the stress and anxiety that I felt about being unemployed.

Complete the "Honey-Do" List

Remember all of those household tasks that we all put off when employed because we don't feel we have "time" to do them? When I started to stress I looked around the house and completed one of those tasks. After becoming unemployed I now had time to clean out the garage and attic, and repaint the windows. Completing these long neglected tasks helped renew my sense of self-worth. I also earned some much needed cash and reclaimed space from selling the unused items that I "found" when I cleaned.

Volunteer

Soon after becoming unemployed, I began volunteering at my local nursing home. I helped the staff with sorting items that are used as prizes for Bingo night, and I spent time sitting with various residents and listening to them. There are so many people in assisted living that are cheered up by having the presence of someone that listens. This activity didn't cost me anything and I learned so much from listening to them.

Whenever I feel depressed about my circumstances, I just think about some of the stories I have heard from people who have actually lived through the Great Depression and World War II, and I feel both encouraged and thankful. Working with the elderly is not for everyone, but there are food banks, homeless shelters, local schools, libraries and many other organizations that need volunteers. If you find that you have too much time on your hands, consider volunteering for a local organization. You will diversify your resume, gain valuable insight, and enjoy yourself in the process.

Hobbies

Have a secret passion or talent that you've never had time to fully express when you were employed? Why not spend your time doing something you enjoy? Brush up on your artistic endeavors, complete some craft projects, and finish that novel you always wanted to write. You will not only get a sense of accomplishment and joy; you may find a way to turn a profit by turning your hobby into self-employment.

I have always enjoyed writing, so when I couldn't find a new employer, I began earning money on the side as a part-time Internet blogger. Over time, I was able to grow this hobby into a successful small business providing editing and copywriting services to B2B clients.

Some friends of mine pick up cash by selling hand-made jewelry and giving music lessons. One friend of mine has turned his passion for fitness into a business. For two hours each night he hosts a "Body Boot Camp" in our local park. People actually pay him to show them how to exercise. He now earns more money each month as a personal trainer than he did as a business executive.

The important thing to remember is that the ending of your job is not the end of your life. As the old saying goes, there is "opportunity in crisis" and we can all get through difficult times when we find positive ways to cope with the stress and anxiety in our lives. 

By finding ways to cope with stress and keep a positive attitude, losing my job ended up being one of the best experiences of my life, because it forced me to take a chance on my talents and work for myself by starting my own small business. Now, I actually make more money than I ever did working for someone else, and I am doing work that I am passionate about and that is meaningful to me. 

Photo Credit: buckle1535

Top 5 Personal Finance Apps

By Lyn Brooks,  Contributor 

It seems like there is an app for everything these days, including apps for saving money and budgeting. There are literally thousands of personal finance apps on the market to chose from, but I've found that the following five are the best personal finance apps that help users like me to create budgets and save money. Using these apps has helped me to be successful in modifying my family's behavior so that we can stop living paycheck to paycheck and get our finances on track.

Mint

Mint is available for desktop users as well as Android and iPhone users. Just download the free app and this program makes it super easy to perform three tasks that I've found are absolutely necessary to get our finances in order: create a budget, track spending and save money.

I've linked my Mint account with most of my lenders, so that the program sends me payment reminders, and I also receive email notifications of any usual spending, or when I get close to maxing my budget in a certain category. All of the spending on my debit and credit cards is automatically entered and categorized, so that I can instantly see where my money is going without having to bother with complicated spreadsheets or calculations.

The program provides helpful hints about how and where I can save, and allows me to set multiple savings goals. Since I've started using this program, I was able to visually see and eliminate those tiny "budget busters" that add up over time. 

In just a few months, the program helped me to establish and fund a $500 and $1,500 short and mid-term emergency savings funds. So far, the main drawback that I've discovered with this program is that there are a few lenders that the program is unable to access and sync information with, so I have to manually update those accounts each month.

Big Oven

As part of creating and sticking to a budget, we've been looking for ways to reduce waste and save money. When we analyzed our family's spending, we found that one of our family's biggest expenditures was food. We were able to save quite a bit by eliminating fast food and now only rarely dine out. Groceries are still expensive, and there are reports and studies that show that most Americans waste over 40% of their food each year. My family wasn't an exception to this startling fact.

By using free apps such as Big Oven, it's easy to come up with new twists on common leftovers. Just pick three items you have on hand, and viola the app will give you an easy recipe that's quick to make and delicious. This is especially handy for those times when you've made all of your regular "stand-by recipes," and you are tempted to eat out just to have something "different" to eat. The app comes with features such as a meal planner and grocery lists as well. It's available for desktop and PC users on the web, as well as for Android, iPhone, iPad, Kindle, Nook and Windows phone users, and it's free.

Grocery iQ

This is another great app that we've been using to save money on food. This app works with coupons.com, so I don't have to worry about printing out coupons. I just save coupons with the app, and I can link my store savings cards as well. It also helps me to stay on track as I can easily create lists, sort items by aisle and even scan bar codes to add items. The program allows you to email and share lists and coupons as well. It's free, and is available on the web, as well as for iPhone, Android, iPad and iPod Touch users.

RedLaser

This app makes it easy to compare prices for an item at different retailers. I just scan the barcode, and the program searches and compares the prices at the online site for many top retailers. This not only helps me to save money on the actual purchase, but I save time as well as the gas I would have spent driving around looking for the lowest price on an item. 

A few weeks ago, I was able to save about $12 on a present for my daughter by comparing prices on a pair of jeans and a blouse. While $12 isn't much in and of itself, saving a few dollars here and there on purchases I was going to make anyway does add up over time. In addition to making it easier to save money when shopping, the app provides other helpful information. One of my favorites is that it will locate the nearest location of a book that I want to read, and will include the library as well as stores and online shops in the search results. This shopping app is free, and available for iPhone, Android and Windows Phone users.

GasBuddy

This app has been around for several years, but I've not found anything that beats if for instantly giving me an easy to use, side by side comparison for the cost of gas at all of my area gas stations. It's great to use at home, or even when I am on a trip. The app is free and I can access it on the web. It's also available for Apple, Android, Windows Phone and Blackberry devices. Even if I am only saving a penny or two a gallon, it all adds up in the end and helps me to be able to increase my family's savings fund.

Of course, there are other apps that can help you and your family to track your finances and save money. Let me know in the comments section below if you've tried any of these apps to save money, or if you have any favorite personal finance apps that are helping you to stop living paycheck to paycheck.

Photo Credit: Jason A. Howie

This is an updated personal finance article written by the author that was originally published on Yahoo! earlier in 2014.