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The back-to-school sales are over. Next up: Halloween and then the doozy, Christmas. The store window propaganda will soon start, and like every year, people will pile debt on their credit cards.

One area of household budgeting that tends to be poorly accounted for are the infrequent, lump-sum expenses. People are not likely to spend $100 per month on clothing. Rather they are more likely to spend $600 twice per year. It's the same for holiday expenses. We don't buy $10 per month of toys. We buy $120 worth in December.

The problem for the many people who are only making ends meet on their regular expenses is that these non-monthly expenses can derail us. We have gifts to shop for before the holidays and sales to tempt us after. Alcohol consumption rises in December with all the family get-togethers (perhaps to survive them) and then as we enter January, we're tempted by the prospects of tanning on a beach at an all-inclusive resort.

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Add it all up and you could have consecutive months of overspending by more than $1,000 per month.

For many people, the norm is to spend the money and then pay it off. The debt remorse kicks in, which usually means the debt gets paid off, but every time that happens a new cause for celebration is just around the corner. Think Valentine's Day and the sudden jump in prices for petals. It never ends. But we keep treading water - for now.

If people could save up ahead of time instead of financing a purchase after the fact, they could earn interest as opposed to paying it. The overall cost would come down, not to the mention stress levels. But of course, flipping that switch is easier said than done. Mostly it means delaying gratification for at least a little while. And that's not a lot of motivation.

With experts divided on the possibility of another global recession, here's an idea worth considering. Pretend you lost your job today and will be unemployed until the end of the year.

Tighten your purse strings immediately and take the leftover money and put it into a savings account. Switch to no-name brands and cheaper foods at the grocery store. No going out to fancy dinners or movies. No buying songs on iTunes and no lattes. If you don't face any penalties for putting 1,000 channels of TV on hold, try that too. Only spend on needs, not wants. See how far you can take it.

Think of it as a fire drill. No one knows if there is a global recession coming and if and when it will impact Canadian jobs, but perhaps the prospects of such an event is enough to motivate you to shift from financer to saver through a temporary crash-test.

If you try it and are successful, the key is to continue to be one step ahead by constantly saving up for the next event as opposed to always paying off the last one. If you plan ahead, those pesky non-regular expenses are actually pretty regular.

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Budgeting boot camp

It would be tough to simulate a total loss of income, but you should try to cut your spending as much as you can on a temporary basis. Expenses that are not practical to simulate being cut can be written down so that at least you have an idea as to what your actual minimum expenses would be if you really had a significant loss of income.

  • Pinch your pennies hard for three months on luxuries. Put that money into a savings account.
  • Calculate what you would change if you really did lose your job. Could you downgrade your car? House?
  • What penalties would you face for cancelling long-term contracts (think cellphones, gym memberships, cable TV)?
  • After you’ve figured out your minimum living expenses, calculate how long you could you survive.

This exercise might provide the motivation you're looking for to switch from financing to saving, and hopefully it will only ever be a drill.

Preet Banerjee, B.Sc, FMA, DMS, FCSI is a W Network Money Expert, and blogs at wheredoesallmymoneygo.com. You can also follow him on twitter at @PreetBanerjee

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