Saving for big things--how?
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Saving for big things--how?
| 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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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
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.
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
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
Shannon
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