Christmas Fund
Christmas is just around the corner (lol), so I thought I’d prepare now just to get a small jump on my Christmas expenses.
Okay, I’m buying dividends for Christmas expenses but most likely I won’t use it until year 2012 or maybe even 2013…
I’ve had such great success with My Lunch Experiment, that I decided I wanted to do something similar with another source target for the stock dividends to be allocated for. The beauty of the Lunch Experiment is that the money was free in some respects, since its money that would have been spent if I didn’t come up with the idea for the lunch experiment in the first place.
The money for a Christmas Fund is a bit tougher since the money for my lunch experiment was supplied by the money that I would have spent on lunch out at work.
I ended up gathering up money from sources where my paper money was just sitting doing nothing at home.
Money Sources included the following:
- Cash that was sitting in a drawer in my office. This purpose of this money was used for cash gifts for Birthdays (mainly for the kids).
- Cash that was sitting in a small firebox in the basement.
- Money that I had stashed in my car for “on the road” emergencies
- A few small piggy banks around the house
- And finally 100 dollars I had in between a few pages of a book.
All told, I was able to collect about $1,200 for the purchase of the dividend stock(s) that will be used in the Christmas Fund purchase today. I’m tempted by some high stock yields, but I’m probably going to settle on less risky dividend yields(shooting for the 3% to 5% range).
After I get money back from income taxes, I think I’ll add in $1,300 to the amount in the fund, bringing the total to $2,500. This should be a great base for such a fund!
I think after a number of years, once I get to $12,000 in the fund, I will only contribute $500 per year.
I know it seems like I’m really focused on dividends lately, but I really want to get these funds established early this year! I’ve learned thought previous experience if I don’t start them early when it’s still solidly on my mind, the task may get put off, sometimes for years.
-MR
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I wish I had secret stashes of money around the house I could invest with!
Just curious, have you ever considered going with a dividend ETF over individual stocks? Although I do know you seem to like higher yields than what you would probably get with an ETF.
Regardless, lets just hope the stock market continues to go up!
I wish I had more, I’m tapped out now 🙁
Actually, I’m considering such options. I know what I’m currently in for my Lunch Experiment is more high risk than not…
A dividend ETF sounds like a decent solution, at least the fees should be fair vs a mutual fund of that type…
Yes, I’m hoping the market keeps going up and inflation doesn’t increase too quickly!!!
I want to find $100 between my book pages too!
Kris raises an interesting question. Why do you choose dividend-paying individual stocks rather than an indexing vehicle that pays dividends?
I wish I had more “Money Books” like that paying kind vs the reading kind… But that was my one and only…
I’ve thought about going with the indexed options with are dividend specific, but I’m having too much fund playing with individual stocks… My 401K is all mutual funds though including a balanced fund.
I am thinking about them though 🙂
That’s great that you have cash stashed all around your house. 😉 As for dividend stocks, do you intend to pull a set amount out each year for Christmas? As the fund grows, will your Christmases grow? I’m just curious as to what you’d do with extra money in the fund.
After a few years of building it up, I’ll may start to use the dividend for Christmas purchases, but until then, the money will get plowed back into the dividend stocks.
I think that as my kids grow, they will want more expensive electronic (actually my son is already asking for an Ipod touch or a laptop). So I don’t ever see that fund stop growing…
I like the idea of taking random money that you find here and there, and lumping it all together to make an investment, whether dividend generating or not. Though I do like your specific idea too. Nice to have money laying around like that, I have to say! 🙂
I figure it was wasteful just letting the money sit. Now all I have at home is a lot of gift certificates…
Although I like the concept of dividend stocks or mutual funds, I believe in reinvestment of dividends. You certainly can use them for living expenses, but there is a tendency to feel it is found money and spend it more freely. It is how you treat the income that is important.
Both my lunch experiment and my Christmas fund are highly targeted. That said, I will divert the dividends from these funds to whatever enhances my family’s life, although that’s unlikely. It’s all about balance! We’re luck though, both my wife and I are too frugal if anything.
I let dividends reinvest in my 401K, Roth IRA and certain stocks in my regular brokerage account.
While I do reinvest dividends, it is not automatically. I’d rather get a decent amount and then invest that money when there is a buying opportunity via a downturn in the market (not easy…).
I love you dividend experiments! Keep ’em coming! I wonder what you’ll come up with next! 🙂
I only have one more dividend fund planned this year, but it has a twist to it that I’m still trying to work out the details on.
I’ve been wanting to do these ever since I was a young college student. 🙂
I can’t wait to get into this kind of mindset, where I’m building different streams of income. I won’t be able to focus on it though til the mortgage is paid. That’s just too darn simple not to do as much as I can and as fast as possible.
I’m small scale, but it’s still exciting! I’ve always wanted to create dividend income streams and now I can! I wish I were able to do it earlier…
That’s a smart use of your funds.