Skip to main content

That Time of Year

Most of you know that I have four adult daughters (and thus four sons-in-law) and five adorable grandchildren because I have shared it (probably multiple times) before.  What you might not know is that about HALF of those important people in my life have birthdays that fall in about a three-month span with Christmas right in the center. If I was normal and not a planner, I might panic.

Each of us may have a number of expenses that might not come due every month. Some of these can include but are not limited to Christmas and birthdays, which I already mentioned, insurances, and property taxes. If we aren’t prepared for them, they just might throw us a little bit. How can we be better prepared for that kind of thing?

I am SO glad you asked! I would advise you to set up a sinking fund.

A what?

A sinking fund. It is basically an account or other place to put money that is set aside for something special.  In this case, it is saved for payments that will come due in the future. It can be called by many other names like a reserve fund, a backup fund, or a contingency fund. It’s just a predetermined place to stash some cash that you know you are going to need in the not-too-distant future for something specific.

Ok, that makes sense. I know I need a sinking fund. But how do I know how much to put in my sinking fund?

Another GREAT question!

Here’s a good start. Total up how much you spent last year on Christmas, birthdays, and every other payment that “surprisingly” came due in which you had to scramble to come up with the money to pay. Divide that total by 12, and designate that much every month to go into a special spot that you don’t touch until you need to pay one of the aforementioned expenses.

Now, don’t you feel a little less panicked? I sure do.

Comments

Popular posts from this blog

It Happens Like That

And, in what seems like the blink of an eye, Memorial Day is over, school is out (or almost out), and my favorite time of the year is here! I love summer. I love it when the sun comes up early and wakes me. I love flip flops and shorts. I like to be warm (ok, not HOT, but warm). This is when I thrive. And I think it’s an excellent time to take a vacation or road trip. That being said, I plan a long time in advance for a vacation because I won’t finance one–and I’ve taken some pretty amazing vacations! I don’t usually just take off on last-minute road trips, either, but I’m learning to be more flexible in my old age. So I have done that on occasion, too.  Now, this blog post isn’t about the last-minute drives I’ve engaged, cruises I’ve embarked, or the countries I’ve explored (being a debt-free, self-employed, budget-loving, young, empty-nester has its perks!). This post is about getting you to a point where you, too, can take vacations without stressing about paying for it late...

Timing is Everything

I was told that a good time to buy a car is January or February. Why? I would guess it’s because many people are financially destitute right after Christmas (because they have not yet been introduced to my blog!) so car sales are down. I do think there is another reason. I think that most people have yet to file their taxes and receive their tax returns (a.k.a. overpayment that they loaned interest-free to the government ) with which they plan to make a down payment. Now it’s March, and many people have already filed their taxes and received said overpayment that we common-folk refer to as a return, and it’s burning a hole in their pockets. This can be good news for you if you have things you want to sell. Now is the time to capitalize on the extra influx of cash. What do you have around your house that you no longer use that you can sell? Speaking as someone who has done this very thing, I must warn you. Selling stuff you don’t need anymore and collecting the cash can be addicting...

Know Your Limits

When I was 17, I drove a 73 Nova. It used to be really easy to do things like changing taillights myself. That is no longer the case. If I tried that on my later-model vehicle (which is more like a computer than a car), I’d do more damage than good, because there are some thing you should just not do yourself. It will cost you more in the long run. That being said, there are probably some things that you usually pay someone else to do that are not getting done right now. My advice is to just be patient; depending on what it is and your skill level, it might end up costing you more to fix your mistakes. Let’s discuss some of those… Obviously, most if not all car repairs are just better done by a licensed, trained professional, including oil changes. They can also correctly dispose of used petroleum products. Depending on your tax filing status, a professional can help you avoid overpaying the IRS. I remember cutting my daughter’s hair when she was little, and I made a me...