Confused about how to handle $ in 2010
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| Mon, 12-28-2009 - 10:49am |
I'm still trying to work out a basic budget for 2010. I find it all pretty overwhelming.
I have worked out how much to throw at debt (credit card and student loans). I'm happy with the number, it's pretty high, but still manageable. And it should allow me to knock out most of my debt (not the student loans) in 2010. I've got a pretty good handle on what my grocery budget should be, eating out, 'entertainment', what my utilities bills are, gas for my car, bcp, etc. I also have a number in mind for savings. It's tiny .... but it's still more than what I've put aside the last few months. I don't like saving nothing, even a few dollars a month makes me feel secure. But I also don't want to put a lot in savings when I have credit card debt with high interest to take care of first. I also will be putting money each month towards a Christmas fund in 2010. I love this idea and am excited about it! :)
My concern is emergencies, or the unexpected. I see three major areas where something expensive could happen. Car (new tires? towing after a break down? major repairs?), Pets (a puppy and a cat! training? boarding? health issues, surgery?), Medical/Dental (I'm healthy now, but you never know when you'll get sick, minor or major). Over the past few months I've put a "buffer" amount for these categories in my budget (as well as others like travel, gifts/holidays, clothes/shoes, etc.). So for example, I would list $15 for pets in my November 2009 budget, trying to not spend that $15 in case I needed it for something pet related. If I didn't spend it, it just remained in my checking account, carried over to the next month, or spent on something else like gas or groceries. That's all fine since nothing has happened. But as soon as an emergency (like a $400 pet or car bill) happens I will be in big trouble!! :( The idea of "sinking funds" is new to me since discovering this board. I'm considering it but just not sure exactly how to go about it. I'm not sure what exactly to do .......
I have a savings account online through ING. I have one log in/account number, but I actually have my savings divided into 3 different "acounts". I hope that makes sense. (my definitions of what my savings can be used for are very loose. I basically don't touch the money because I don't feel like I should). The first is the largest, I would use that money in a major emergency, for paying off a big chunk of debt, etc. The second is more minor purchases but still big, like investing in furniture, travel, etc. The third is teeny tiny and is a future wedding fund. Should I make one of these accounts my 'sinking fund'? Should I put all money for those three categories in one lump? I can't afford a huge amount each month, which feels discouraging, but I think I need to try this, and will be better off if something unforseen does happen. I could put $10 to medical, $10 to pets, and $10 to car in one place? (the $10 is not set in stone, just picked a number for examples sake). I could move the funds that are in my second tier ING account into the first big one .... making that a potential emergency fund (for use in unemployment only?). Then I could start putting all "sinking funds" into the second account, taking the money out as needed (easily transferred into my checking account).
I am really just trying to set a very basic 2010 budget guideline. I will make monthly adjustments. For example, I will actually budget a chunk of money for pets in January because our puppy is due to be neutered and we would also like to take a 6 week basic obedience class. I could budget money for new car tires in the future when I knew ahead of time I needed them.
Does any of this make sense or am I a budget failure? :) My goals for 2010 are to live within my means, to aggressively pay off debt, to focus on savings after debt is tackled (having the security of an e-fund would be amazing, I was unemployed for 11 months of 2009 and never want to feel that financially stressed again), and to just reduce financial stress wherever possible (hence the sinking funds idea and christmas fund).
Any thoughts and advice would be greatly appreciated. :)


You are on the right path with the savings account or ING account. That money should just build until it is needed for things that don't happen every month. Pet fees, car maintenance fund, car insurance or property taxes fund.
Just keep an eye on your budget like you plan to do. It will need a little bit of tweaking through out the year as things come to light.
This is a work in progress. Good luck.
Like you, I'm trying to get a grip on a "true to life" budget for our house too.
Norma
"Patience is the best remedy for every trouble"- Plautus
Thanks for the reply galstorelady :)
I really like your way of thinking of it as "non-monthly" expenses. I think I can use the categories of pets, car, and medical as reasons to put a bigger chunk into savings monthly. Then anything that comes up, even if it doesn't fit the categories exactly, can be covered by withdrawing from that account. That way I can still keep the majority of the money I already have in savings as long-term savings, or the beginnings of an emergency fund.
Determining the amount to save is the tricky part and where I start to doubt myself. :- /
One regular visit to the vet is roughly $14-$16 for one pet. That's no shots, no medicine, etc. One co-pay for a doctor visit is $20. Again with no medicine or anything else. My car is fairly new and well taken care of, but car problems become expensive very quickly. Hmmm ....
All this money stuff makes my head spin. :)
I'm so sorry to hear about your dogs Norma! :( That is the kind of situation I'm trying to brace myself for. Unfortunately, just like with kids, things are bound to happen with our pets that cost a lot of money! :( I hope you make it through without too much financial hurt and that your pups are back to 100% soon!
I really really really relate to when you said this: It's like I have withdrawal symptoms when I have to take money out of savings for anything.
Let's stay in touch this year and see how we do on our "Balancing the Budget for 2010".
Norma
"Patience is the best remedy for every trouble"- Plautus
lol, yes I hope we have more luck than most governments. ;)
I'll be keeping an eye on you Norma! Reach those financial goals! I'm still sitting here at my desk (slow day at work) cruching and re-crunching numbers. I'll post my final 2010 budget as soon as it's done. Need to figure out how I ended December 2009 first - big mess of receipts to go through and Christmas to tally up