Saving for big things--how?

iVillage Member
Registered: 12-12-2004
Saving for big things--how?
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Sun, 11-27-2005 - 1:31pm
HI, everyone. Just wondering---how do you save for big things? Roof? Yard? New Kitchen? Dishwasher, etc.? Do you just pay off one cc, then use that amount to start a "kitchen fund", or open a mutual fund, or a separate account? It is taking me FOREVER to save for a new kitchen. Whiz..

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iVillage Member
Registered: 03-27-2003
Sun, 11-27-2005 - 2:30pm

Hi Whiz,

I agree, this is a big question. There are several approaches we take from time to time. First of all, we have our $1000 contingency fund, so if anything major comes up that we have to take care of right away, it's there.

But we never touch that for things like new kitchens.

We did have our AC go out this summer, which was a $3600 replacement cost. Fortunately for us, we have a second income (mine) that is not budgeted. So the money was sitting in an account, technically savings for business expenses, but since I'm sole proprietor (i.e. there is no legal or tax difference between me and the company), we used the money for our AC.

But for things like new floors, vacations, etc., we figure out how much our cost will be, then we add a percentage (usually about 10%) because everything always costs more than you expect it to (LOL), then we decide when we would like to be ready to do it. We divide the cost by the number of months between now and when we want to be able to do it, and that is the amount we need to set aside each month to accomplish it.

Of course, sometimes that monthly amount is not feasible, and we have to look at either a longer timeline or creative ways of getting the money quicker (or both). My business helps us a lot with these kinds of things, and dh gets quarterly bonuses that also help A LOT.

But it's also nice to have a definite timeline for the goal, and start setting the money aside. It's a nice feeling when the time comes, too, to have been saving that money for so long. Somehow it's more satisfying than money that just falls in our laps (not that that happens all the time or anything, but it does happen on occasion, like when my very generous aunt sends us a big check or gives us a car, two things that have happened in the past year. Of course, that kind of money is nice too, and helps a great deal, but it's honestly not as satisfying as money we've scrimped and saved...).

In typing this, I've just realized how incredibly blessed we've been lately in regard to money. Wow. Of course, we're incredibly blessed in other ways as well, but I hadn't even realized how many "extra" sources of income we've seen in the past year.

Anyway, good luck saving for your kitchen. It's so hard to wait! But it will feel so good when you pay for it in cash. And once all your debts are paid, you'll be able to save up so much faster because all that money that's going toward debt can be put toward savings.

Blessings,

Heather

iVillage Member
Registered: 03-26-2003
Sun, 11-27-2005 - 5:35pm
We have different accounts set up to save for big things. We have a money market account that we contribute $100 to each month. That is for emergencies (house, car, appliances,etc). Then I have a club account (that is what Navy Federal calls it) set up for the Disney World trip we are taking in the Spring. We contribute $100 to that as well. I really don't have anything saved in our regular savings account. We invest in my husband's retirement account, the club account and the money market account. I have some debt that I need to pay off but I don't want to tap into our savings for that. So I'm going to pay what I can now and then hopefully pay it off at tax time.
iVillage Member
Registered: 12-12-2004
Sun, 11-27-2005 - 8:08pm
Hi, Heather. Thanks for your helpful hints. I never thought of dividing by months, but it makes sense. Sooo, if the new kitchen would cost about$25K, then I have to save, oh, about $500/month??? I think I will start small, and save for the new garage door ($2K). That way, I can see rewards sooner. BTW--DH says if he pays off the car loan (he's waiting for final payoff figure), I have to use the $353.00/month to pay off the cc first, since I got myself into the mess! I remember one poster (Danni??) saying to continue "paying" the car payment by writing a check to put into the savings account for new car. Whiz.
iVillage Member
Registered: 12-12-2004
Sun, 11-27-2005 - 8:14pm

Hi, H2BM: Here's what I currently have going:

l) TIAA-CREF--$100/month (small and large cap stuff). Just started this.$200 total
2) Credit union Account---$100/month. (that's for the E-fund)--a paltry $200 at present. If I would have left it alone, it would be about $1500!)
3) Savings account--$100/month. Have about $160 in it

Sooo-what other things should I open? Money market account at bank? I want something liquid. I do not have enough to put into a CD. Thanks WHiz.

iVillage Member
Registered: 03-26-2003
Sun, 11-27-2005 - 8:21pm
That is why I like our money market account. I have it set up at a different credit union than the one we do our regular checking business with. If I had it at the same bank it would be so easy to transfer funds if I was running a little low during the month. Anyway, I have a check book for the money market account. I do not carry it in my purse. I keep it in the safe. That is not as tempting for me. If something comes up I can write a check to cover it. Each check must be at least $250. Anyway, that is what works for me. Sounds like you have a great set-up! :-)
iVillage Member
Registered: 12-12-2004
Sun, 11-27-2005 - 11:04pm
Thanks for info, H2BM. Does the money market offer better returns? I know it has more options. Am thinking of checking it out at local bank. WHiz.
Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
Mon, 11-28-2005 - 9:13am

DH and I saved for our new patio and landscaping retaining wall this summer by figuring out when we wanted to do the project, how much it was going to cost, and then how much we would need to save each month from that day until the day we wanted to do the project.

All my best,
Danni

iVillage Member
Registered: 03-27-2003
Mon, 11-28-2005 - 12:01pm

I keep my miscellaneous savings in ING. It's liquid, but it does sometimes take up to a week for transfers to hit my checking account--so it's not TOO liquid. I have to plan before I can take money out, which reduces impulse withdrawals. Anyway, what I like about ING is that I can open as many separate accounts as I like (no cost), and nickname each one. When I open my accounts online, they are all listed in one page with their nicknames (Home improvement fund, medical fund, dental fund, clothing fund, Heather's personal savings, Christmas fund, etc.). I can see at a glance how much I have set aside for each purpose. And you can hardly beat their great interest rates.

I've been very happy with them, and it's so easy to use.

Good luck with whatever you decide. Saving the $2k sounds like a great way to get your feet wet with the skill.

Heather

iVillage Member
Registered: 12-12-2004
Mon, 11-28-2005 - 11:53pm
Hi, Danni! So good to hear from you. DH says we absolutely cannot use a 2nd mortgage or something like that. If we can save some of the $10K from the 2nd refi, maybe, but that is going toward paying off medical bills (eventually) and the car payment (mine-about $6K) this month (dec.). I will start by trying to put the amount of the car payment into the e-fund or to a savings account and see what happens. Friend of mine paid off her student loan in a yr (18K), so I guess it can be done. BTW--I LOVE that dog in the Christmas outfit. Whiz.
iVillage Member
Registered: 08-19-2003
Tue, 11-29-2005 - 7:41am
Hey whiz I sent you an email through your profile. Let me know if you do not get it!

Shannon


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