Coffee heat rising

budget

State of the Chaos

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A little quieter here today… let’s hope it’s not the calm before the next storm. Let’s see how the various crises are doing:

1. In the department of Funny’s Money: I have no idea. I don’t even want to know, it’s such a chaotic disaster. This month I never got an untrammeled moment when I wasn’t too exhausted to sit down and work on the budget, so I’ve just been spending left and right. Financial manager sent over enough to cover the down payment on the pool rehab, which starts Monday. I reset the checking-to-emergency savings automatic transfer to move less than half of what I originally thought I could manage, so that (at least) will leave a little more basic survival money in checking.

2. Hand cancer: still waiting on the biopsy. But I’m calling the doc’s office on Monday to ask if we can accelerate the process. I want this damn thing OFF. Where they shaved off enough to send to the lab, it’s growing back with élan. Whatever it is, it’s very fast-growing and so presumably aggressive. And at times it really hurts. Hurts and itches. Turns out pain and itching are defining characteristics of squamous cell cancer. Why exactly we have to wait for biopsy results until the cows come home to cut the thing out escapes me.

3. Dog decedence*: No credible sign of croaking over yet! Matter of fact, this dog is getting much better. Just now she remembered the chicken jerky treats that reside in a jar on the kitchen counter and decided to do the Dance of the Manipulated Human, thereby eliciting a chew treat for herself and for Ruby. The cough seemed to come back a little: it had subsided to the point where she coughed only when she slurped up a lot of water (which she’s always done…corgis do that). She had stopped coughing when she barks and stopped coughing when I lifted her off the bed. So I cut back the Benadryl from 1/2 tab in the morning and 1/2 tab in the evening to just 1/2 tab at night. A-n-n-d…the cough started to come back. This morning I gave her a dose at doggy breakfast, and lo! No coughing.

*Yes, yes, I did invent that word. Why do you ask? Etym: Late Modern English, from decedent (a deceased person)

4. Car: It seems to have survived its brush with the flatbed trailer with no very serious damage. The gouged tire is still rolling. It hasn’t blown, at least not so far…and yeah, it has been on a freeway or two. I’m trying to stay off the freeways, because I don’t trust the thing. But to get out to the new dermatologist’s office sometime before the end of my life expectancy, I pretty much have to ride the 101 for a number of miles. So far, so good.

5. Cord-cutting Cox escape: Last night La Maya and La Bethulia invited me over for dinner. In the course of conversation, I remarked that I need to get rid of the fake “land line” (Cox’s new version is really VoIP, and not very good VoIP at that), replace my extensions with cheap clamshells and get an iPhone.

“I have two old iPhones that I’m not using!” says La Bethulia. “Want one?”

Do I want one???? Grab!  Well, she quite reasonably wanted to delete all her data on the thing before I trot it over to the Apple store to get it set up. And they’ve forgotten the password for the thing. But it turns out it’s not hard to reboot the thing all by your little self. So…I may try to do that with my son’s help, or just hire an Apple tech to do it. Paying someone a hundred bucks or so would be a lot cheaper than buying a new iPhone! 🙂

6. MacMail fiasco: Still not fixed. Right now the only way I can get to my email is through the Web interface, which is less than ideal. It does allow me to access incoming mail, but all my carefully designed preferences have been screwed up. Not erased — which would have been far preferable — but all jumbled around. So it’s a mess. And I guess I’m going to end up either having to pay Cox for an email account, the bastards, or start using Gmail, which I really really REALLY do not want to do. This, I will figure out later.

7. Other little dramas: Have yet to decide whether I’m going back to choir. The associate director has kindly put me on the women’s chant choir, which I love.  She urged me to come to choir on Sunday despite having turned on my heel and marched back to my car and gone home after last Wednesday evening’s unpleasant exchange at the door (not with her but with a woman who makes no secret of her dislike of me).

I don’t know. I’d pretty well decided to quit — just never go back, that’s how disgusted I am. And besides…

Really, the only thing that keeps me from feeling a great deal more serious about moving out of Crime Central is the choir. I can’t afford any other close-in district — this neighborhood is cheap because Conduit of Blight Blvd, Gangbanger’s Way, the Blightrail, the meth clinic, and the population of bums keep the property values way down. Comparable homes anywhere else are at least a hundred grand higher, and these days more like two hundred grand.

Abandoning the choir and the church would open two housing options: Fountain Hills, wayyy on the east side of the Valley, and Sun City, wayyyy on the west side. Both have the advantages of low crime rates and pretty decent nearby shopping. They’re both quiet and peaceful, and there’s no way any politicians and their greed-driven backers are going to build a boondoggle through the middle of either one. Sun City is a ghetto for old folks, which I really do not like. Fountain Hills is one helluva long way from everything but the Mayo Clinic, a distance that I also do not like. I don’t know anyone in Fountain Hills and, because I don’t make friends easily, this would make me feel isolated and unhappy. But Fountain Hills has pretty scenery and it is close to upscale shopping and to my favorite second-hand store, My Sister’s Closet. Sun City has the advantages that it’s very cheap to live there, and that I do know some people there and so would start with a kernel of a social life. Which would be good. I guess. And the writer’s group I favor meets way on the west side, so it would be easy to cultivate more friends there. I guess.

Well, if I’m going to snab that phone, I need to get up and do it now…La Maya’s relatives are about to descend on the house. And so, away!

Budget off the Rails

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Yuck!

Okay, I admit it: I have neglected the budget. Yea verily, I have lost the art of penny-pinching.

Result: I’m running out of money, two months before the start of my next “personal fiscal year,” which starts in September. In 2017, that’s when I took the last Required Minimum Drawdown from the 401K, which was supposed to last a year.

Didn’t.

So next year I have to figure out how to live on 21 grand plus a pittance from Social Security. Since running this house and feeding me and the dogs consume about 2 grand a month, that’s a challenge.

Just now I’m as close to broke as I can get, budget-wise, considering that I have enough cash in the bank to cover about six weeks of expenses, and it’s eight weeks before the start of September.

The other day I mentioned the “envelope method” plan I’d cooked up: fill a Costco cash card with a budgeted amount to spend there during a month, and when it runs out, stop buying. This makes some sense, though nothing is to stop me from streaking out of the Costco over to the nearest Safeway and filling out the shopping list…probably at more expense than just buying everything at whatever CC would cost. Hmmm….

Whilst staring blankly at an unfriendly spreadsheet, a little INSIGHT dawned… Don’t budget by the month. Budget by the year. And instead of using cash cards as “envelopes,” use bank accounts. I already have a checking account, which juggles cash flow; an emergency savings account (containing $4.61); and an account to hold payments from Medigap and Medicare B, preparatory to forwarding that money to the Mayo.

[The Mayo does not “take Medicare assignment.” This is a bureaucratic way of saying they don’t accept direct deposit from Medicare or your Medigap insurer. So, every goddamn time you go to the doctor or an ER or whatEVER, you have to field a blitz of ditzy little annoying checks, deposit them in your bank account, and then pay the Mayo. Right now one has been sitting on my desk for awhile, waiting for me to get around to the hassle of scanning and uploading it: $24.17. The Mayo’s outstanding bill is several hundred dollars… It is, in a word or two, a fuckin’ nuisance.]

Where were we? Yes, staring blankly, dreaming up a fresh scheme…

A little calculation showed that if I were to get a freaking grip on spending, in theory this year’s drawdown should just about cover 2018/19 expenditures, if nothing happens. By “nothing,” we mean no major car repair bills, no appliances having to be replaced, no giant vet bills, no dental work…a very big “nothing,” indeed. But let’s pretend a person could get through 12 months without having to confront any of those.

Right.

What if I kept the drawdown that just hit my checking account in my checking account, but did not keep Social Security income in checking? What if I auto-transferred each Social Security deposit over to the Emergency Savings account…. Said E.S. account is empty just now, putting me at considerable risk of future misery. Twelve hundred a month would, in theory, load that account with some 14 grand over the next year, allowing me not to have to spend crazily to keep up with routine month-to-month costs.

And instead of keeping the entire drawdown in checking, what if I transferred the $8,408 a year demanded by taxes and insurance (!!!!!!) over to the present tax & insurance savings account, now empty because the 2018 T&I bills have all been paid. What if?

What would then remain in checking would be the amount I could spend on living expenses. This would be much truncated by setting all the net Social Security income aside for emergencies. But since I now have approximately $0.00 set aside in emergency savings, the truncation would be very much worth it. And, according to my English-major calculations, if I could cut the Costco bills down from $300 a month to $200 a month, this scheme would be eminently do-able.

Why do I think it would work?

Because the AMEX billing cycle closed yesterday. I charge everything on American Express, mostly including Costco but also racking up bills at various grocery stores and other retailers. This month the tab was only $775. Basically, an AMEX bill reflects all living expenses except utilities, taxes, and insurance.

It’s usually more like $1200. That means I spent some $425 less this month than I usually do.

Well, if I can spend $425 less than normal in June, I can do it all the time, no?

Yeah: probably “no.” But what’s to stop one from trying?

So the money from Fidelity hit the credit union this morning. Here’s what we now have:

$16,644 to live on for the next year (stashed in checking)
$8,408 for taxes & insurance (stashed in T&I savings)
$14,532 incoming from Social Security over the next 12 months (routed to Emergency savings)

So even though Social security will bring the year’s total cash available to something over 31 grand, the plan is to try to live on just $16,644.

That works out to $1,387 a month. So far in the current year, the one that is driving me to the metaphorical poorhouse, I’ve spent an average of $1,750 a month, a difference of $363.

So to live on this proposed new budget, I’ll have to cut spending by about $365 a month.

However, a backup fund will be growing at the rate of about $1200+ a month. If need be, I can draw down from Emergency Savings to make up the difference. So even if I regularly went over budget by some $363 every month, the red ink would only amount to about $4355. That would still leave something like 10 grand in Emergency Savings at the end of a year.

How to cut $363 a month out of normal spending?

Well, obviously:

• Don’t go to dentists.
• Don’t go to vets.
• Don’t drive the car any more than absolutely necessary (so as not to run up repair bills).
• Don’t buy clothes.
• Don’t buy shoes.
• Don’t go out to eat.
• Don’t go to shows or movies or musical events.
• Cling to every goddamn red penny.

It’s going to be a mighty dull year, I’m afraid. But I can’t be running out of cash two months before the end of every 12-month cycle. Something has to be done to get caught up with the spending

Revise That Budget!

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Summertime, and the living is…darned scary! With no real steady pay flowing from the community college into the money bin, I get nervous, even when I know very well that the vast emergency fund sitting in the credit union will cover a full year’s worth of expenses. To start with, I don’t want to use the emergency fund for day-to-day expenses, and to end with, I’d really like to stay within the $5,739 budget (Social Security + Fidelity drawdown + leftover money from the low-cost winter months) I figure will cover me during the long, hungry summer. To do that, I see I’m going to have to revise my budget…mightily downward.

There’s not a thing I can do about the $1,240/month nondiscretionary budget: the utility bills aren’t going away, and they can’t go unpaid. And while during the winter costs came in way under that budget because utilities were low, this summer they probably will bust the budget. The highest bills will hit in August, when payment for July water and electric use comes due; I expect those costs to exceed the $125 and $225 I’ve budgeted for them, respectively. Last August I had a $257 power bill, and the utility company is socking us with an 8%+ increase this year.

The only part of the budget with any give at all is for nondiscretionary spending: food, household expenses, clothing, vet bills, dental bills, gasoline, yard and house repairs, and everything else.

After I was laid off, I cut that budget from $1,500 to $800 a month. So far, so good: since Canning Day, I’ve managed to stay on track every month but May, when I had to pay for the glasses and the clothing extravaganza.

Now the plan is to cut discretionary spending from $800 to $500.

Fifty-seven hundred and thirty-nine dollars—the amount I have to see me through the summer—amounts to $1,830 a month when prorated over the whole summer. But $1,240 nondiscretionary costs plus $800 discretionary spending come to a total $2,040 in monthly spending: a $210/month shortfall.

So, I figure if I can cut $300 a month from the discretionary budget, there should be enough to get by until teaching income returns. Even if I don’t reach that goal—which I probably won’t, because it’s pretty extreme and because every time you’re short of money every damn thing in sight breaks and the dog gets sick—if I can come close, I’ll make it through the summer without eating very far into the emergency fund.

Wow! A $300-a-month budget cut! How do I plan to accomplish this?

• Cut back on food. The beans are already soaking in the slow cooker’s crock pot. I have some beef in the freezer, a fair amount of frozen fish and shellfish, a lifetime supply of pasta, a giant container of rice, and a stack of canned salmon in the pantry. I will need to buy some fresh produce and dairy, but otherwise I mostly can get by for a month or two by eating what’s on the shelves and in the freezer.

• Conserve gasoline. I’m trying not to use the car except on the once-weekly day I have to schlep to the campus to for a course preparation meeting. On that day, I’ll do grocery shopping and any other errands that are along the homeward trail.

• Buy nothing other than food unless it absolutely can’t be avoided. No clothes, no booze, no gardening stuff, no meals out, no electronic doodads, no movies, no nothin’.

• Find free ways to entertain myself. This includes hikes, long doggy walks, swimming, TV (broadcast, o’course) and freebie video downloads, and socializing with friends.

{sigh} It’ll be a challenge. That’s about the best I can say for it.

Beans-soaking

Dollars and nickels and dimes, oh my!

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Seven-thirty in the morning and I’m beat. The pool has been backwashed, the unhappy pool cleaner set in motion (again!), the rug backing Cassie pee’d on in last night’s panic at the vacuum cleaner run through the washer and hung on the line, the regular laundry started, the ironing I haven’t done for the past three weeks set aside (to be ignored a while longer), the dog fed, me fed, the kitchen cleaned up, and the dog walked. Now to sit down to Quicken, figure out what to do with the $600 tax rebate that finally came dragging in, and decide how to handle the red ink in this month’s budget.

I’m beginning to think $1,500 just isn’t enough to cover my monthly costs above and beyond the utility, loan, and insurance payments. It seems like a generous amount: for heaven’s sake, it’s almost a whole paycheck! How can I not live on fifteen hundred bucks???This month, with two more days to go in the budget cycle, I’m $351.28 in the hole. Although I have that much in savings, it’s $1.28 more than I had budgeted to buy some much-needed clothes in this summer’s sales. So…guess I won’t be buying clothes. Again. My wardrobe is rags just now, with exactly no summer dresses or skirts. All I have to wear is Costco jeans, which make me look like a beer barrel on two legs, and I’m out of decent shirts to go with them.

I’ve thought the budget issue had to do with the heavy hits from Anna’s final illness, which added up to over $1,000. But that’s now in the past. This month’s cycle started anew, and I’ve had four unexpected dings:

Leslie’s, clean out pool filter: $87.54

  • Veterinarian: examine Cassie for limp: $95.30
  • Dry cleaner: clean dhurrie rug to remove ointments Anna rubbed into it: $15
  • Vet: X-ray Cassie’s leg after I stepped on her sore foot: $17
  • Apple: new operating system to deal with server migration: $69.82

That comes to $402.66 in extra hits. Though it sounds like a lot, it shouldn’t be enough to put me $350 in the hole. As a practical matter, the $1,500 budget normally has so much play I can buy as much as $300 in clothing or other indulgences without having to dip into savings. What that seems to suggest is instead of being “generous” by about $300 a month, my $1,500 living expenses budget now has only about $102 of play ($402 – $300). A year ago, if I’d had $402 in unplanned expenses, I’d be about a hundred bucks in the hole…not $350.

Evidently inflation in routine costs has increased my day-to-day expenses by somewhere around $300. Costco’s gas was down to $3.99/gallon last week. I paid almost $60 for a fill-up that used to cost about $35, and I’m already almost half-empty. Though I’ve been staying away from the university as much as possible, now that my dean is back in town, I really should show up to work more often. If I drove to campus every day, I would have to fill up at least once a week–possibly more than that. That’s $240 a month, up from $140. Grocery inflation? Doesn’t apply. In fact, my grocery bills have been falling because I’ve quit driving to stores whenever I need one or two things. In this budget cycle I spent $361 on groceries, a relatively modest amount for me, since that is the one area where I do indulge myself. During the same period in 2007, I spent $571 at grocery stores (though some of it went to making food for two large dogs). The hair stylist has jacked up his prices, so that this week’s haircut plus a ten-dollar tip came to $75…and he cut my hair so short I look like one of those eccentric old ladies who gets her hair shaved off so she doesn’t have to comb it.

Wait: there’s a $55 car maintenance bill; that would account for some of the overrun. So that brings extraordinary costs to $450.

Problem is, the extraordinary costs keep rolling in. Yesterday a bill for car registration showed up: $116.34. That comes off the top of next month’s billing cycle. Then Cassie pee’d on the other dhurrie rug last night, adding another spot to the place where she shat, which I never cleaned out adequately. So now that rug has to go to the cleaner. It’s old and was never a fancy, expensive number like the one I had to take to the specialty cleaner after Anna smeared antibiotic ointments all over it. So I’m unloading it on a cheaper dry-cleaning outfit, whose rep says they’ll do the job for $70. That’s $186 out of next month’s budget…before the budget cycle even begins.

This month’s $350 shortfall…where will it come from? I could use the tax rebate to cover it, but really, I wanted to put that into the Renovation Loan payoff fund. If it comes out of savings, then it seriously does mean no clothing purchases until the winter sales. Argh! I desperately need summer clothes. Since I look like a wacky old lady who gets her hair shaved off so she doesn’t have to comb it, I might as well go around in faded, worn-out rags anyway. Won’t make much difference

Uh oh. Waitminit here. Sometime back I entered a note in Quicken to the effect that there’s a surplus in the credit-card budget’s cookie jar. That’s the result of living under budget for several months and not transferring the surplus to pay down loan principal…it created a de facto emergency fund

Am I saved? Could this be true? Let us away to the credit union’s website…
* * *

HOLY mackerel!

There’s a surplus, all right. It’s nine hundred and seventy-six bucks! Lordie. I noted that at the beginning of the month and then forgot it, in the flurry over the website, the injured dog, hurting myself (when I fell on the pavement tripping over the dog), running late on a client’s job, and generally being too darn hot and too darn old.

Amazing grace! It’s a miracle. Maybe Lady Karma has decided to quit kicking me in the shins. Or at least, maybe this time She missed.
🙂

Getting back on budget

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[sorry: this is an old post from iWeb. i neglected to change the date on it]

I am broke, broke, y-broke!

The $1,012.53 the vets charged for Anna’s care over the past month and a half ran my budget into the red last month and did it again this month. Every week this month has ended in red ink. For the current week, which began the day before yesterday and runs through the 20th, I’m already $3.09 in the red. And I need groceries, dog food, gasoline, repairs on the irrigation system, and repairs on the pool cleaner. Getting back on budget before my financial structure implodes calls for some serious fiscal strategizing!

Here’s where we are now:

The first step in getting back on track with a budget is to figure out what you absolutely must purchase before the end of the limping budget cycle. Luckily, I have plenty of food in the freezer to carry me over for a week. I’m out of orange juice, but I won’t die without it, and besides, M’hijito has neglected to harvest the Arizona sweets on the tree in his back yard; before the hour is over, whatever fruit is still usable will be in my refrigerator. The repairs can wait-whether they can or not, they’ll have to. One is a minor fix that I tried to do this morning but found my hands were not strong enough to perform; with any luck I can get a male to do this for free. If not, the plants will have to live for a few days without water, or I’ll have to haul a hose around the yard.

So, this leaves us with only two genuinely imminent purchases:

With the van down a third of a tank of gas, there’s no chance I can make five round-trip commutes to the Great Desert University without refilling. A fill-up now exceeds $55, and so if I have to buy more gas between now and the 21st, I’ll be deep in the red. The little dog turns up her nose at Science Diet (which, despite the hype and the vigorous marketing to veterinary practices, really isn’t all that great for dogs-it’s full of meat “meal” [you don’t even want to know what that is!], corn, and brewer’s rice, baleful ingredients one and all). I found a canned food that contains real meat, brown rice, and vegetables, exactly what I would feed if I cooked her food myself, but as you can imagine, it ain’t cheap. Luckily, she doesn’t eat much. She’ll have to make do with the Science Diet I picked up when I got her, which I’ll use to stretch a can or two of fancy dog food. If I run out of quality canned dog food, she can eat cottage cheese with veggies and rice, which I have on hand. So, $55 for gas plus about $7 to $10 for dog food will put me about $68 in the hole at the end of this month.

That’s the best-case scenario. But there’s only five more days to go, and so it COULD happen. I might not even have to spend that much on gas-half a tank purchased on Wednesday or Thursday would take the car back and forth to campus for the rest of the billing cycle and cost about $30. So there’s an outside chance the budget may be only $38 in the red. Only. Argh.

ther expenses are pending. This situation requires me to list upcoming expenses, distinguish what is urgent and what can be put off, and how I will do without them.

So, let’s suppose that between now and next Saturday I manage to restrict spending to two or three cans of dog food and some gasoline. Where exactly will the missing $38 to $68 come from?

One source is the emergency fund. As I’ve remarked before, I keep $500 of my emergency fund in checking, to serve as a “cushion.” So in fact, even if I overspend my $1,500 budget, the cash will be there to prevent a check to American Express from bouncing. I could simply end the month in the red, put it behind me, and try to stay in the black next month.

But I’d rather not eat into the emergency fund unless absolutely necessary. Even though the breathtaking veterinary bills for Anna amount to a budgetary “emergency,” I’m close enough to the black that my regular diddle-it-away savings could cover the budget overrun. In fact, my “play money” savings account contains about $1,400, so I could easily convert the red ink to black right now. I could transfer the $368.53 deficit that ran this week’s apportioned budget into the hole from savings to checking. That would put this week in the black and cause me to stop grinding my teeth about this matter.

However, I’d rather use my diddle-it-away savings for something fun, not to cover the cost of my pet dog’s death. This is particularly so since GDU’s dratted biweekly pay schedule has reduced the monthly play-money savings from $200 a month to $87.50 a paycheck, meaning it took a long time to accrue $1,400.

The most sensible strategy, I think, will be to wait until the billing cycle ends, on the 20th, and then transfer the amount of the overrun from play-money savings to checking. If I manage to keep the red ink to no more than $70, that’s a lot better than a $368 bite. In fact, all I’d have to do is not make one of this month’s biweekly deposits to savings: the $87.50 would more than cover it.

So, to summarize: What are the strategies to deal with budget overruns?

  1. Establish and maintain an emergency fund!
  2. As the budget nears zero, list pending expenditures.
  3. Separate out absolutely necessary spending from purchases that can be put off.
  4. Describe in writing which spending to put off, and write down what exactly you will do to cope without these items or services.
  5. Calculate the amount of your shortfall, after necessary expenditures.
  6. Use discretionary savings to cover the shortfall, to the extent possible.
  7. Fall back on your emergency savings when you have to.

Targeting your emergency savings

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J.D. at Get Rich Slowly discusses author Mary Hunt’s idea for the freedom account: an emergency fund in which you subdivide out amounts for specific intermittent expenses, such as car repair, wedding gifts, or expensive clothing purchases like shoes. The way J.D. describes it, you keep the money in a single checking account; then estimate your irregular, intermittent costs and keep a little log showing how much is dedicated to which purpose.

The basic idea is a good one. Trying to keep track of a bunch of different purposes for money accruing in a single account, though, strikes me as a giant pain in the tuchus. Also, even an ING checking account doesn’t earn enough to make it a good place to store money for long-term expenses.

Here’s a slightly different approach to the same goal of targeting your emergency savings:

Establish the categories in which you have intermittent expenses and identify the time intervals in which they occur: totally irregular, yearly, biannual, over several years. Then open separate accounts for these purposes. The length of the interval determines the kind of account you use.

For example, I look to the irregular little surprises that can happen at any time (plumbing or car repairs, vet bills, etc.), annual expenses (car and homeowner’s insurance, property tax, income tax), and long-term expenses (purchase of a new car, about once every ten years; major repairs or renovations on the house, which I hope don’t happen more often than about once every eight or ten years).

For the constant extra gouges, I have a money market account at the credit union. Into it I put $87 per paycheck–down from $200 a month since GDU’s shift to biweekly pay, because of the drop in net income that caused. When I have to cover an expense, I simply transfer the needed amount back to my checking account.

To pay my annual automobile and homeowner’s insurance bill, the annual cost of registering my car, and my annual property tax, I put $300 a month into a separate money market account, also at the credit union. I keep these funds physically separate from the day-to-day emergency funds because I can’t afford to have that money disappear: if I don’t pay my property tax, the house will be confiscated; if I don’t register or insure the car, the state will forbid me to drive it.

For long-term expenses, I use Vanguard funds: the Prime Money Market fund for major house expenses (reroofing, for example) and the Short-term Investment Grade Investment Corporate Bond fund for savings toward my next car. I plan to keep a car for ten years, so if I put even only a thousand bucks a year into that fund, what’s in there after a decade should be enough, combined with the clunk’s trade-in value, to buy another car in cash. Although neither of these is FDIC-insured, they’re both very safe (neither was exposed to subprime mortgage instruments) and they each earn more than I can make in a checking account. AND you can write checks on either of these funds. So it’s easily accessible when I need it.

When savings for specific purposes are collected in separate accounts, to tell how much you have for a given need, all you have to do is look at the bottom line. To my mind that’s a lot easier than trying to keep track of a bunch of separate theoretical subtotals in a spreadsheet.

2 Comments left at iWeb site

hatuman

Some good thoughts.Thanks.It wouldn’t hurt to have more accounts open to help keep track of things.

Monday, May 19, 2008 – 07:22 AM

Cordelya

I have a similar thing going on as far as emergency money goes. I have a savings account at ING, and I also have several cash CDs there. I have one CD ($500 for 5 years) to stand as my auto insurance deductible. If I need to pay the deductible, there it is. If I don’t, it earns good interest and I have an incentive to not touch it (early withdrawl loses me 6 months of interest). I have a similar CD that is labeled “New Washing Machine” – our existing machine is rather old and I’d prefer to have money standing by to replace it. I’ll have to get some more CDs set up for car purchases – that’s a perfect candidate for laddering.

By the by, I choose cash CDs over money market specifically because of the withdrawl penalties – it’s that extra incentive I need to keep me out of them!

Monday, May 19, 2008 – 08:18 AM