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The Savings


I received several questions about the $200 budget item towards savings that I listed in my last post.    The answer is a bit complicated.   We currently have have several savings accounts that are for irregular expenses…with the idea that we could also use those accounts as an emergency fund in a true emergency.   These funds are currently auto-drafted into the savings accounts every payday.  Each category receives $20 a month added to it.  However, the original thought was that some categories are close to being “fully funded” and then that money could be reallocated to other categories until they need “refilled”.    Here’s how I have things divided:

Work expenses100.03
Home improvements133.00
Irregular expenses (auto registration/costco/ AAA)39.53
Yard/garden/pest control70.00

Total: $802.58

In explanation:

  • The work expenses category covers things like continuing education, licensing and replacement items for Hubby’s work.  Once we reach $500 this will be considered fully funded.
  • Home improvements will never be considered fully funded.
  • The Fun/holiday fund covers everything from fireworks on the fourth of July, extra grocery expenses for Christmas baking, campground fees, and the occasional movie date night.This will be considered fully funded at $100 while we are still reducing debt
  • Gifts are a hard one.  I will have to think about what I would consider fully funded.
  • Clothing I will consider fully funded at $100, mostly because we do not have expensive clothing needs.
  • Whereas we have an older dog and an older cat that at some point in the future will need a greater amount of vet care, I would not consider this fully funded until we reached $1000
  • The replacements category is actually very new to our budgeting, inspired by needing to finance a fridge when ours died.  This is meant to be money for when an appliance dies, or a new mattress etc. is needed.  I am not sure where I would consider this fully funded, most likely at $1000+
  • The auto category is pretty self explanatory.  We currently own one vehicle out right and have a loan on our second.   These funds are used for maintenance and hopefully will eventually grow enough that we can replace a vehicle by paying cash.
  • The Annual expenses category covers things like AAA and costco memberships, and car registration.  I would like to grow this to be able to pay for six months of auto insurance at a time in order to receive the prepay discounts.
  • The final category is yard/garden.  I LOVE veggie gardening.  We just moved into our home last summer, so this will cover soil amendments, hardscaping, seeds and repairing the disaster of a sprinkler system that currently exists.   It also covers pest control to come out four times a year to treat for voles and the giant wolf spiders that we get here.  After this coming summer, the amount going into this account should be able to be reduced significantly as some of the much need landscaping is completed.

Obviously, If I wanted to keep putting money into these categories until they were all fully funded, I would be saving forever, and that would impact my debt payoff.   I am currently leaning towards continuing to save in them at my current speed until I reach a total of $2000 across all the accounts.   At that point I would simply add to the accounts if I had used the funds.

What do you think?  Am I making a mistake by combining my savings categories and emergency fund?  Is there something I should be saving for that I am not?







  • Reply Katie |

    Have you considered using a software to track your spending? I know Ashley uses YNAB and I’ve been using it for a couple of years as well. It’s seriously life-changing. I keep an emergency fund and then have RDFs (rainy day funds) for many of the same categories as you. I think keeping things separate is important as money can really only have one job. Of course, as you are building them up and something happens, you naturally have to pull from one to another. Since we just bought a house, it’s going to take awhile for us to build up some RDFs that I’m comfortable with. I have a long way to go for home maintenance and now I’m thinking I need an appliance replacement fund as well.

  • Reply Juhli |

    I highly recommend you also start and emergency fund. Stuff will happen – illness, need to travel for a family situation, larger than anticipated problems in any of the areas you are currently saving for, job loss/income reduction, etc. You need an emergency fund too IMO.

    • Reply Walnut |

      I agree with Juhli in that you’ll want to start thinking about an emergency fund for 6 months to a year of expenses to sustain a job loss. It’s tough to balance it with your desire to get a jump start on repaying some debt (especially that 27% interest card).

      Maybe as a start you can add one more category to your savings list to add $20/month to your starter emergency fund? Then as time goes on, maybe up that one to a $100/month contribution to start getting some momentum. I guarantee you will sleep so much better at night and protect yourself from small blips in the radar if you can get up to even 1 month of expenses tucked away.

  • Reply Marzey doats |

    I don’t think you should really be saving for future vet expenses while you are paying 27% interest on credit cad debt. Something happening to your pet would rightfully be classed as an emergency, as would an essential appliance breaking down. These should be provided for by having an emergency fund of whatever you are comfortable at. Lots of people say 1,000, but I live in the expensive northeast, and 1,000 wouldn’t even cover an expensive car repair. I am more comfortable at 2,500, whatever works for you. That amount covers all your unexpected emergencies and gets replenished if you end up having one. You should have this money saved before you start making extra debt payments.

    Your other categories are irregular expenses. You know you are going to have them, they just don’t happen every month. Dues, taxes, clothing, gifts, that sort of stuff. Those should be accounted for in your monthly budget. For example 10/month for a once yearly 120 dollar expense. Add up your irregular expenses, and transfer that amount every month to savings, so it is there when you need it. It forces you to budget those expenses, and to stick to those budgets. You don’t just have a hundred bucks sitting in the clothing account, you know you have 120 per year to spend, and thats it.

    • Reply Theresa |

      I agree. I think 27% interest on $4000+ is an emergency. Transfer the balance to a lower interest card or at least settle on a lower emergency amount $1000 (?) And start hitting that card. How much interest in dollars are you paying each month?

      • Reply Angie |

        I think its awesome you’re trying to look ahead and plan for expenses. Its a great start. However, I think you need to be more realistic about costs and timing. For instance, I drive maybe 5k miles a year and my car maintenance savings is $100 a month! $20 is not going to help you when you have car repairs it will barely cover an oil change. Meanwhile $20 on clothes can be a perfect amount!

        Personally, I’d put items in your budget for known expenses such as car registration, insurance, etc. Then save up a $1000 buffer for emergencies. Then pay off that paying credit card emergency ASAP. I mean… You’re already paying crazy interest anyway. Pay it off… If you happen to have an emergency and have absolutely no cash you could technically run it up again. But having savings and a balance at 27% is totally counterproductive.

        Thanks for putting yourself out there! The beginning may be rough with all the comments but we’re just trying to help so don’t take anything too personal.

        • Reply Amy |

          I agree that our car saving seems very low at first glance, and i should have explained more clearly, The awesome hubby does 95% of all auto maintenance, so we are often only buying for parts…many of which we get at steep discounts because of hubby’s work connections.

  • Reply Jenny Z |

    I third (maybe fourth) YNAB! Totally transformed my finances. YNAB also teaches about aging your money. That’s a great concept. Check out the videos and blog posts they have to learn more about it.

    I think you’re making the right choice to combine your savings and emergency fund for the time being. If $2000 is the magic number that lets you sleep at night then stick with it (for me that number is $500, but I’m single/rentless/almost debtless… other people were suggesting $1000… you just gotta figure out what works for you). As soon as you reach that magic number, then hit the debt as hard as you can. Especially, anything with insane interest rates.

So, what do you think ?