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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.

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