I love that I can view dh's paycheck online several days before he receives. I use Excel to do a monthly budget. In Dave Ramsey fashion I designate where the money will go before we get it.
We are getting a bit more breathing room since we have been doing this almost a year. I was able to up our eating out fund a bit. I am trying to up the amounts going into our Life Happens accounts (car repair, medical, dental, etc). This is another area to focus on when the debt is paid off.
My question is: do you consider your emergency fund to cover serious emergencies or "life happens" type of things? I am thinking that the emergency fund should be for dh losing his job or being out of work for an extended period. I guess that is my reason for wanting to totally leave it alone and using our "Life Happens" account for more minor stuff. I was curious what other people think though.
The Budget
February 18th, 2008 at 11:40 pm
February 18th, 2008 at 11:46 pm 1203378408
February 18th, 2008 at 11:53 pm 1203378808
This money just sits. Upon retirement, withdraw and go to Hawaii. That said, monitor it every six months or so to be sure no other expenses need to be accounted for. This is your emergency fund.
Your "life happens" fund is your savings account. You put in as much as you can as often as you can, however, realize that "life happens" and that chunks may need to be withdrawn from time to time. At the end of the year, move a safe amount (say five hundred dollars if you had no automobile problems that year) to a vacation fund or some other "fun money" account.
Remember, you must have some fun from time to time in order to reap the benefits of your labor. A normal household that is aware of its debt to income, maintains financial stability and invests for the future has at least two, if not three money accounts to draw from:
1. Emergency Fund
2. "Life Happens" Fund
3. "Fun Money" Fund
The first two are musts, however, the third does not occur until ALL of your retirement accounts are maxed out.
February 19th, 2008 at 05:54 pm 1203443682
Later, we built up a general cash cushion (aka serious EF). This could be used if one of us died or if DH suffered a big business loss. In addition, we could dip in to this if the various cushions in the budget were not enough.
For example, if our dog became ill and needed some treatment, the cushion in the Pet category would cover it. But if he went through a major prolonged illness or suffered a catastrophic injury, we would probably end up dipping in to the general fund.
Also, if the transmission on our car went out and had to be rebuilt, the cushion in the Car category would cover that. But if our only car was totalled and had to be replaced unexpectedly (we only carry liability insurance), the general fund would be used.
This system has worked for us so far (knock on wood).
Whichever system makes you feel confident that you can handle whatever life throws at you, that is the system you should use!