Budgeting for “extraordinary” costs

So pleased am I with the scheme to hoard “pool” groceries (can you believe it? No trip to any food purveyor needed this weekend!) that I’m beginning to contemplate the possibility of engineering other kinds of “pooling” budget strategies.

Is there, for example, a way to “budget” or “pool” repair and maintenance bills that fall outside the bounds of ordinary monthly bills? You know, those annoying costs that don’t quite break the bank but may keep you from hitting a savings or loan paydown goal in any given month.

It strikes me that some of these sorts of expenses can be put off and some can’t. Obviously, if your car breaks down or your tooth starts to hurt, you’ve gotta get it fixed. But other things…maybe no.

For example: I know that the pool filter needs to be cleaned out, the air conditioner will soon need its summer-season service, the chimney should be professionally cleaned, and I need to get the Dog Chariot’s oil changed.

However:

• The pool will run for a long time without a cleanout. It’s the first of March. That could be put off until the first of May.
• The air conditioning service could be done this month or next; putting it off until April wouldn’t do much harm.
• The car would be much happier if its oil were changed one of these days.
• The chimney? Are you kidding? We won’t see chestnut-roasting weather for another nine or ten months! On the other hand, the local chimney sweeps will be feeling mighty hungry along about July or August and probably will offer some midsummer deals.

Suppose you listed the pricey projects that need to be done, from the most to the least urgent. You might work things so that you could schedule and budget for them on the order of one a month. You also could plan to do them near the end of a billing or income cycle. If an emergency expense comes up before then, you use the budgeted money to cover (or help cover) that and put that month’s near-routine maintenance bill off for a while. For example, I could run the air-conditioner into May before having it serviced, without doing much harm. If I had the AC service scheduled for March 30 and my car crapped out on March 15, I could simply put off the air-conditioner company for another month.

Some months, you’re lucky enough to have no major maintenance or repair bills. During those miraculous periods, you could put aside whatever you’ve budgeted for mind-bending little exigencies, building…oh, yes!…a “pool” of funds to cover out-of-the-ordinary expenses! If several months went by without any surprise bills (as happened to me this winter), you could end up with plenty of cash to cover a run of emergency bills…and as we know, it never rains but it pours.

The strategy would look something like this:

1. List the upcoming maintenance and repair bills you can reasonably foresee.
2. Order them from most to least urgent.
3. Schedule them, over the next few weeks or months, near the end of your budget or pay cycle.
4. If an emergency surprise comes up during a given budget or pay cycle, put off the scheduled project until the next cycle.
5. If no untoward expenses arise, get the things done on time. If something more urgent comes up that makes the scheduled project unaffordable, put off the latter for a month or more.
6. And if nothing needs to be done, take the average amount you figure these things cost (in my part of the country, around $80 to per episode) and put it in savings, building yourself a pool for not-quite-ordinary expenses. Over time, this will provide you a fund so that you don’t have to pay for these things out of cash flow—and maybe you won’t have to put off semi-optional projects in favor of surprises…maybe you can afford them both.

Okay! First project that needs to be done: oil change, tire rotation, and general car check! Let’s put up Chuck’s Auto Service to doing that on March 30, and see if we make it till then without any other expenses.